Preamble

The House met at half-past Two o'clock

PRAYERS

[MADAM SPEAKER in the Chair]

Oral Answers to Questions — TRANSPORT

Lane Rental

Mr. Couchman: To ask the Secretary of State for Transport what estimate he has made of the amount of time saved by motorists since lane rental was introduced.

The Minister for Roads and Traffic (Mr. Kenneth Carlisle): Lane rental contracts have, on average, been completed 30 per cent. faster than conventional contracts since their introduction in 1984, and we estimate that that has saved more than £120 million in delay and other costs.

Mr. Couchman: My hon. Friend and I are probably more at one on lane rental than we will be on line rental later today. Coming as I do from cone county in Kent, I ask my hon. Friend to reassure the House that when he decides on major works on the A20/M20 and A2/M2— which are parallel roads—he will make certain that the works are staggered and that interconnecting roads between those two major highways are not subject to road works at the same time.

Mr. Carlisle: My hon. Friend makes an important point. I am sorry if there is any congestion in Kent, but it is partly caused by our determination to get those roads finished in time for the opening of the channel tunnel. Lane rental has a considerable amount to offer. A maintenance contract that used to last one month will be reduced by 10 days by lane rental, which makes a huge contribution to cutting congestion and reducing frustration among local people.

London Commuter Services

Mrs. Bridget Prentice: To ask the Secretary of State for Transport what representations he has received on the level of services to the commuters of London and the south-east; and if he will make a statement.

The Minister for Public Transport (Mr. Roger Freeman): In the four years to the autumn of 1993, British Rail record a drop of 20 per cent. in London commuter passengers. British Rail has therefore been obliged to reduce services. Reductions in the new timetable amount to about 3 per cent. overall, which is half the recent rate of fall in demand. As demand recovers, services will be increased.

Mrs. Prentice: How can the Minister justify the 8 per cent. fare increase in January on Network SouthEast—the highest in the country—when last week peak-hour trains through Lewisham and north Kent were cut by 42 and the Sunday service was halved? Will he tell the House how that will enhance passenger comfort and persuade more people to travel by train?

Mr. Freeman: Fewer passengers are using Network South East compared to four years ago. The recession has caused a reduction in London commuting. As we recover from the recession, demand will increase and additional services will be provided. British Rail, like any other great industrial enterprise, must tailor its services to demand. As to fare increases, I hope that the hon. Lady will welcome the fact that British Rail has for two years been differentiating between lines. Where there is a better service, there are more than average fare increases, but where it is acknowledged that the service is relatively poor, fare increases are relatively low.

Mr. Sims: Many people living in outer-London constituencies rely on train services for social and leisure activities, as well as for getting to and from work. Although one accepts that the frequency of services must be matched to demand, does not my hon. Friend think that it is extraordinary that British Rail is reducing Sunday services to one train an hour? Is that not itself likely to lead to a greater fall in demand?

Mr. Freeman: As I said, British Rail must react to the fall in demand by cutting services, because that is the nature of a cash-limited nationalised industry. I hope that, with the gradual introduction of franchised passenger services, operators will take more commercial risks. I agree with my hon. Friend that one can easily fall into a downward spiral of service as services are cut and demand falls. I hope that we will be in a virtuous upward spiral with private sector operation.

Mr. Harvey: How soon do the Government envisage privatising commuter services in the south-east? We heard originally that most of the privatisation would take place during the lifetime of this Parliament; later, that it might take 15 years; and, on another occasion, that the floodgates were being held back until next year. Now we hear that another 18 areas are to be identified today. Has the Department of Transport listened to the Prime Minister's advice, that lessons should be learnt from the local election results? If so, what lessons has the Department learnt about the speed of this legislation?

Mr. Freeman: Our policy has not changed. We said in our election manifesto that the intention was to have a significant number of franchises in place at the end of this Parliament. I can confirm that the intention is to let the first franchise in the second half of next year. Thereafter, we shall proceed gradually. It is an evolutionary process; it is not a process that involves a great number of franchises being let at the same time. We shall learn by the process. It will take a number of years, and certainly beyond this Parliament. But our policy has not changed. All that has happened today is that my right hon. Friend the Secretary of State for Transport has spelt out what the long-term plan is for franchising all of Great Britain's rail services.

Mr. Ottaway: I remind my hon. Friend that not all commuters travel by rail; many of my constituents travel into London by road. I remind him also of the complete lack of good main roads between Croydon and the centre of London and that this is the only sector where there is no good main road into or out of London.

Mr. Freeman: I am grateful to my hon. Friend for reminding me and the House of the need to improve road services in London. My hon. Friend the Minister for Transport in London has already laid out the Government's policy on red routes. Both my hon. Friend and I have emphasised the importance of traffic priority measures to help public transport, such as buses, move more easily in the capital. My hon. Friend the Minister for Transport in London will have heard what my hon. Friend has had to say.

Mr. Prescott: Is the Minister aware that the recommendation to Network SouthEast is standing room for 16 in a carriage and that at present the number is about 160? By cutting services, the Minister would at least reduce the amount of time that people spend standing on our trains. When he talks about services, he has to take into account that people are travelling in congested, dangerous conditions on Network SouthEast trains.

Mr. Freeman: I would not agree with the hon. Gentleman that Network SouthEast runs an unsafe service. British Rail rightly places great reliance on safety. This year alone, British Rail will spend about £250 million on improving the safety of rail operations. When public sector franchisees run services, safety standards will be as high, if not higher.

Traffic Flow Management

Mr. Evennett: To ask the Secretary of State for Transport what efforts are being made to introduce new technology into the management of traffic flows; and if he will make a statement.

The Secretary of State for Transport (Mr. John MacGregor): My Department already makes use of new technology for three purposes: assisting traffic management, enhancing road safety and providing information for road users. Closed circuit television and variable message signs are now well established on the busiest motorways, such as the M25. Cameras are also being used on trunk roads in London to detect drivers speeding and violating red light signals.

Mr. Evennett: I thank my right hon. Friend for his reply. I certainly welcome the use of new technology to improve traffic flows and reduce accidents. Will my right hon. Friend confirm that the red light signal cameras that have been installed have helped to reduce accidents considerably in Greater London, particularly serious accidents, and that the Government will continue to use technology to improve traffic flow and reduce the number of serious accidents on our roads? Furthermore, can my right hon. Friend confirm that the numbers of road deaths and serious road injuries in this country are among the lowest in the whole of Europe?

Mr. MacGregor: My hon. Friend is entirely right on the last point, but we want to do better. I agree that speed cameras and cameras at traffic signals can contribute

considerably towards improving road safety. Since they were introduced, speed detection cameras have reduced fatal and serious casualties on roads by 50 per cent. Cameras at red light signals have reduced accidents by 60 per cent. The cameras also assist with traffic flow, the point of my hon. Friend's question, because if accidents are reduced, traffic flow is improved.

Mr. Barry Jones: Does the Secretary of State accept that some traffic jams will not be solved by technology, however interesting the case may be? I refer him to a problem on the England-Wales border, where a new River Dee crossing is required, which will cost many millions of pounds. Can he assure me that that scheme will go ahead and will not be subject to the public expenditure review? Does he know that the communities of Queensferry, Shotton, Connah's Quay and Kelsterton are suffering a tremendous environmental blight? They need the scheme urgently. Can the Secretary of State give us a promise about that scheme?

Mr. MacGregor: That point is a long way from new technology to assist traffic flow. I cannot comment on that scheme, but if the hon. Gentleman would like to table a specific question I shall do so. I note his support for our record road building programme to improve traffic flow generally. I hope that he will continue to support all that we are doing in that regard, including lobbying some of his colleagues who sometimes object to it, because there is no doubt that our record road building programme is greatly assisting our economic competitiveness by reducing congestion.

Mr. Burns: Does my right hon. Friend have any plans to install cameras on the M25 to detect speeding? If there are plans to put cameras on that and other motorways, will there be advance warning signs so that drivers are more aware that they may be exceeding the speed limit?

Mr. MacGregor: The knowledge that such cameras are around in itself discourages speeding, but I take note of what my hon. Friend says about warning signs. At the moment, the main technology on the M25 is designed to improve information for drivers. We are also experimenting with quite an expensive new scheme which will be introduced in due course to try to stop bunching and starting and stopping. I have no doubt that we shall also install cameras to assist in other ways.

Oxleas Wood

Mr. Raynsford: To ask the Secretary of State for Transport what consideration his Department has given to the advantages of saving Oxleas wood from destruction by means of a deep bore tunnel under the wood to connect with the east London river crossing.

The Minister for Transport in London (Mr. Steve Norris): When making their decision to proceed with the scheme, the Secretaries so State for Transport and for the Environment took full account of all the evidence presented at the public inquiry. That included the independent inspector's conclusion that a bored tunnel under Oxleas wood could not he justified.

Mr. Raynsford: Does the Minister recognise that the Government scheme, which would involve the destruction of this unique and precious piece of ancient woodland, has


been universally condemned, and that even the British Road Federation is now calling for an alternative route to save Oxleas wood? When will the Government come to their senses and call a halt to this act of environmental vandalism?

Mr. Norris: The hon. Gentleman tempts me to remind the House that such hyperbole is so wildly wide of the mark that it makes no rational contribution to the debate. The reality is that 89 per cent. of Oxleas wood will be unaffected by the scheme. Perhaps the House should be more aware of that—11 per cent. of the wood will be taken, but 89 per cent. will not. Perhaps that puts the issue into proper perspecitive.

Mr. Peter Bottomley: Will my hon. Friend remind the House that the inspectors recommended that the road should be covered if it went through Oxleas wood but that, since the inspectors' reports, the British Road Federation has said that if the bridge which would help Newham and perhaps Thamesmead were built, the road through Oxleas wood would not be needed and that, in line with the Government's east Thames corridor proposals, the road should go towards the M25 and Dartford—[Interruption.]—rather than coming down into Shrewsbury ward in the constituency of the hon. Member for Woolwich (Mr. Austin-Walker) and into my constituency?

Mr. Norris: I have seen the BRF's scheme. My hon. Friend will have noted from the reaction that his mention of it has caused that it solves some problems but creates others. It is an interesting proposition which I shall, of course, ensure is fully explored, but we should not underestimate the fact that after the longest public inquiry on record—lasting 15 months—the inspectors concluded that the bored tunnel could not be justified and that, in the interests of what the scheme delivers, the environmental disadvantage was capable of being set against the greater strategic advantages of the new road.

Ms Walley: Why will not the Minister and the Secretary of State listen to what the people are saying about the £1 billion road programme and the way in which it appears to be immune from proper environmental impact assessment? Will he tell the House why he is not prepared to give us the right to know about the scheme, why is he not prepared immediately to make public the European Commission's full reasoned opinion on Oxleas wood and what action he is prepared to take to safeguard this site of special scientific interest from the bulldozer?

Mr. Norris: If the hon. Lady knew a little more about the matter, she would appreciate that the EC's reasoned opinion has nothing to do with the merits of the scheme. I am astonished that she is not aware that the EC's reasoned opinion is based on the merits of the transitional provisions of the appropritate directive. It is, incidentally, on a basis with which the Government have consistently disagreed. I see no reason, therefore, why what the EC has said should have had any impact on the route.
On publication, the hon. Lady will know that such communications between the Commission and the Governments of member states are always treated as confidential by both parties—[Interruption.] I stress that they are treated as confidential by both parties—not just by the Government, but by the Commission.

Heathrow Express

Mr. Haselhurst: To ask the Secretary of State for Transport when he expects construction of the Heathrow express to commence.

Mr. MacGregor: I understand that it is the intention of the joint venture partners—BAA and British Rail—to begin construction towards the end of this year.

Mr. Haselhurst: Can my right hon. Friend assure the House that the period of dilatoriness up to getting agreement for the project is now finally over and that he will use his best endeavours to ensure that construction proceeds speedily? The project now has enhanced importance in view of the welcome decision to proceed with crossrail.

Mr. MacGregor: I agree with my hon. Friend. I was pleased to play some part in bringing the discussions to a conclusion, quite speedily towards the end. I also agree with my hon. Friend about the importance of getting on with the project. It is necessary for the technical details of the joint venture to be finalised between the parties and for some further detailed design work to be undertaken before construction proper can commence. We hope that that will be towards the end of this year and, if there are no unforeseen difficulties, the railway could be open to passengers by late 1997. I am sure that the whole House welcomes the successful conclusion of the discussions and the joint venture and I hope that it leads to many more.

Dr. Godman: The Minister will know that the issue is of considerable importance to all those who travel from Glasgow, Edinburgh and Aberdeen to London Heathrow and who then have that disgraceful journey from Heathrow to the centre of London. Between now and 1997, will the Minister's officials speak to officials of London Transport to speed up the service between the centre of London and Heathrow? Some trains could, for example, stop at Hammersmith and then continue uninterruptedly to Heathrow terminal 4.

Mr. MacGregor: I shall put that point to London Transport. I am glad that the hon. Gentleman welcomes the fact that the joint venture is now going ahead. Given that the question was asked by my hon. Friend the Member for Saffron Walden (Mr. Haselhurst), the hon. Gentleman might also point out to some of his constituents and others from Scotland who come to London that there is also a good service from Stansted airport direct to London.

Mr. Dicks: Bearing in mind that the Heathrow express has a major impact on my constituents, will my right hon. Friend ensure that, with the coming of crossrail, people are not allowed to pop into Heathrow on their journeys, west or east, just to fill up the gaps left by the Heathrow express?

Mr. MacGregor: I note my hon. Friend's point. I do not think that people are likely to do that.

Jubilee Line Extension

Mr. Austin-Walker: To ask the Secretary of State for Transport when a start will be made on construction of the Jubilee line extension.

Mr. Norris: Negotiations are continuing on the precise terms of the funding agreement between London Underground and the parties concerned with the financing of Canary wharf. I am hopeful that they will soon be successfully concluded.

Mr. Austin-Walker: Whether it is the dead hand of the Treasury or the dithering of the Prime Minister, does the Minister agree that the time to invest in our infrastructure is before we come out of recession? Is the hon. Gentleman aware that 85 per cent. of the contracts for the building of the Jubilee line are ready to go, with the prospect of between 10,000 and 30,000 jobs being created? Will he further press the Cabinet for extension of the Jubilee line to Woolwich? Will he confirm that a rail crossing of the River Thames at Woolwich could be built at a quarter of the cost of building the east London river crossing?

Mr. Norris: On the first part of the hon. Gentleman's question, we have, of course, made it plain that we are prepared to commence construction of the line as soon as the private sector contribution is in place. On the hon. Gentleman's point about the Woolwich crossing, he will be aware that that was extensively investigated by London Transport and the conclusion was that it should not proceed at this stage.
As for the hon. Gentleman's point about the river crossing, he will be aware that the road crossing—the east London river crossing—is of major strategic importance to London, particularly the east of London, and that it will, in due course, play a very important role in enhancing infrastructure in east London.

Mr. Channon: I am sure that my hon. Friend appreciates that this is a matter of very great urgency, not only for the obvious reasons that have been outlined on many occasions in the House, but because it is impossible to proceed with phase 2 of the parliamentary building programme—as the overwhelming majority of hon. Members want to do—until we know one way or the other when the Jubilee line extension is likely to take place. Will my hon. Friend bear that in mind, as it is very important and urgent?

Mr. Norris: I, too, understand what my right hon. Friend has said. Any delay to the start of the project is regrettable. However, my right hon. Friend will appreciate that the position that the Government have adopted has remained as it was originally. When the private sector is able to put its contribution in place, construction of the scheme can begin. It clearly cannot begin before that date.

Mr. Simon Hughes: Does the Minister accept that the position on the Jubilee line is absolutely unacceptable? It is 14 months since the Bill received Royal Assent; we have had promises that construction of the line was about to be announced and completed; the money has been standing by for a year; we have had rumours one week that documentation for the scheme was about to be signed and the next week that it was not; two weeks ago, the managing director of London Underground told the Transport Select Committee that the documents between London Underground and the private sector had now been agreed; and every day that passes businesses are blighted and go under. People want an underground line and they want the Government to put their hands on and

not take them off. The people concerned should bang their heads together and get the line agreed. Is that going to happen or not? For heaven's sake, tell us the truth.

Mr. Norris: I deeply resent that last suggestion. It is quite obvious that all the way through our message has been very straightforward. The Government are prepared to contribute around £1·5 billion to the project on the basis that the private sector comes forward with its own contribution of £400 million in cash. I regret the delay as much as the hon. Gentleman. He and I have debated the issue many times. We are making progress and that progress will continue. When the process is complete—and it is impossible for me or the managing director of London Underground or anyone else to set a date at this stage—we will begin construction of the line.

Mr. Dunn: My hon. Friend will be aware that the Jubilee line extension project will make a massive contribution to employment prospects in the centre of London. Will he confirm that he will do all he can to ensure that the project starts at the earliest opportunity? Will he also confirm that the east London crossing will remain in east London and not be shipped off to Dartford, as was suggested by my hon. Friend the Member for Eltham (Mr. Bottomley)?

Mr. Norris: On the first point, my right hon. Friend the Chancellor of the Exchequer made it clear in his autumn statement that the Government are committed to their contribution towards building the Jubilee line. That substantial contribution is well in excess of £1·5 billion. As to my hon. Friend's point about the route of the east London river crossing, he will appreciate that its whole strategic importance is predicated on the assumption that it links the A406 with the A2 where it currently does.

Mr. Tony Banks: Surely the Minister recalls that his Department has issued more press statements on the Jubilee line extension going ahead than I have had hot dinners—and I have had one or two of those? Once again, it looks as though the Government have changed the rules. We now learn that the contracts and understandings that have been negotiated with the private sector have been changed in terms of Government requirements. Have there been any changes in Government requirements since last November with regard to deals with the private sector?
Will the Minister make it quite clear that he is not being pressurised by the Treasury into scrapping the Jubilee line extension altogether? That is what the newspapers and various people in the private sector are saying. Is not the Minister fully aware that unless the Jubilee line extension goes ahead, a large number of question marks will hang over the development in docklands, the City airport, Canary wharf and the whole of the east Thames corridor initiative?

Mr. Norris: I shall not swap tallies of hot dinners with the hon. Gentleman because I recognise that I might lose. I am delighted to confirm that there has been no change whatever in the Government's position. Nor is there any ground between the Department of Transport and any other Department of Government. The Government's position has been clear throughout and I will restate it for the avoidance of doubt. It is that the Government remain committed to putting money into the project once the private sector contribution is concluded and assured. I readily accept the hon. Gentleman's point about the


impact of the Jubilee line extension, particularly on those areas south of the Thames which stand to benefit substantially when the extension is built. I hope that a satisfactory conclusion can be arrived at so that the line can go ahead. But it must depend on the private sector contribution.

Sir Michael Neubert: If that is so, could I confirm from the Government Benches the intense frustration of Londoners that, six months after the announcement of the Government's commitment to the project, one of the principal purposes of the project, the creation of jobs and a recovery in the capital, is being frustrated by continued prevarication by the bankers? Is there nothing more that my hon. Friend can do to persuade them to get their act together?

Mr. Norris: My hon. Friend mentioned the responsibilities of some of the creditors of Olympia and York. The complexity of arriving at an agreement with the creditors of Olympia and York, which I understand was the largest property company in the world when it went into administration, was underestimated. That has necessarily meant that the process of arriving at a new arrangement has been extremely complex and hazardous. I should like to put it on the record that the Government believe that all the parties to negotiations have acted throughout in good faith. Important and difficult negotiations have taken place. I regret the delay in the creation of jobs and opportunities, but I am convinced, as I know is my hon. Friend, that it is right to press the developers, who will gain materially from the development in return for their contribution.

Concessionary Fares

Mr. Spellar: To ask the Secretary of State for Transport what representations he has received regarding the continuation of concessionary fare schemes; and if he will make a statement.

Mr. Freeman: I have received several representations about the continuation of concessionary fare schemes. Such schemes are a matter for the local authorities concerned, not for the Government.

Mr. Spellar: Does the Minister recognise that that was an unsatisfactory response? Concessionary fare schemes and bus passes are a vital lifeline for many pensioners: for many they are the difference between existing and living. Why will not the Minister make a straightforward statement that the Government are committed to the continuation of these enormously important schemes and that they will do everything in their power to ensure that the schemes remain? Why will not the Minister give pensioners some assurance and give them a straightforward answer? Yes or no—will he protect the schemes?

Mr. Freeman: Concessionary fare schemes specifically for buses, but also for other forms of local public transport, are the responsibility of local government, not central Government. Local authorities, including passenger transport authorities, have the responsibility for ranking their schemes in priority. It is a matter for local government.

Mr. Forman: Can my hon. Friend confirm that, during the fairly long period in which concessionary fare schemes

have operated, especially in the Greater London area, most local authorities have acted responsibly and have seen fit to maintain the schemes?

Mr. Freeman: I am grateful to my hon. Friend. He will know that local authorities in Greater London currently provide about £120 million a year for concessionary fare schemes. Local authorities in London are to be congratulated on continuing to support such schemes. It must be for other local authorities to fix their own priorities and continue such schemes as they see fit.

Mr. Snape: Instead of hiding behind the local authority smokescreen, why does not the Minister acknowledge that it was the irrational and arbitary decision of the late Lord Ridley to prevent local authorities from acting as precepting authorities which has brought about the present financial problems and the direct threat to concessionary fares? For once, cannot Ministers tell the truth and admit their responsibilities?

Mr. Freeman: The advantage of the levying system in comparison with the old precepting system is that passenger transport authorities have to reach agreement with local district councils about the political priorities. That seems to be essentially democratic and I believe that the system should continue.

Mr. Dickens: Would not it be extraordinary if those who win the franchises for the various railway networks did not continue the concessionary railcard scheme? Is not it a way of attracting more passengers? Indeed, the new franchisees may even come up with better ideas. Am I right in saying that the Railways Bill makes the provision of railcards for disabled people an obligation?

Mr. Freeman: Railcards are different from local authority concessionary fare schemes. I agree with my hon. Friend that British Rail introduced the cards not as a result of pressure from Government or individual Ministers, or parliamentary legislation, but for good commercial reasons. There is no reason to believe that franchisees will not wish to continue to provide the same service.

Mr. Prescott: Is the Minister aware that his own Government, in the London Regional Transport (Amendment) Act 1985, took statutory powers to force local authorities to impose a concessionary scheme for London pensioners? Why does he draw a distinction between the two schemes?

Mr. Freeman: The hon. Gentleman will know that local authorities have always arrived at voluntary agreements. The Act contains a reserve power, but authorities have reached voluntary agreements every year since they have had responsibility for these matters and I believe that they will continue to do so.

Bus Deregulation

Mr. Congdon: To ask the Secretary of State for Transport what assessment he has made of the benefits to bus users outside London of deregulation.

Mr. Ian Taylor: To ask the Secretary of State for Transport what change has taken place in bus mileage outside London since deregulation.

Mr. Freeman: The deregulation of bus services outside London has resulted in a 20 per cent. increase in bus mileage, with many new services to areas not previously served by buses. Operator costs have been reduced by more than a third.

Mr. Congdon: Given the real success of deregulation in providing more buses, will my hon. Friend confirm that Londoners can expect to receive similar benefits when it is introduced here? When will we have an opportunity to experience those benefits?

Mr. Freeman: I very much agree with my hon. Friend. Deregulation will permit new operators to provide additional services at different times of the week and in different parts of Greater London. That is the experience of deregulation outside London.

Ms Walley: It is not.

Mr. Freeman: The hon. Lady has her eyes closed. In many parts of the country, new buses are providing new services for passengers.

Mr. Ian Taylor: Will my hon. Friend note that in Surrey, as in other areas, some of the services that are now provided are much more responsive to the needs of local people? That is extremely welcome and if deregulation enables it to continue in London, it will be welcomed by Londoners as well. There is no doubt, however, that it is essential for the Government to ensure that the rules and regulations enable bus services to continue: they are much in demand.

Mr. Freeman: My hon. Friend will know that the Government intend to introduce a Bill in due course and to set up a central agency in London to continue to subsidise socially necessary services. Outside London, the position is different: subsidies are provided by local authorities.

Mr. Redmond: The Minister is talking a load of rubbish. He knows that deregulation does not work. It has meant higher fares, clapped-out buses and, in most cases, no buses at all in both rural and urban areas. Will the Minister accept that deregulation has not worked? Will he go up to South Yorkshire and ask old-age pensioners about it?

Mr. Freeman: We have issued a consultation document to all local authorities—and, I hope, to all local bus companies—asking them to comment on how the 1985 arrangements are working. If improvements are necessary to ensure that services are provided flexibly by the private sector, we shall consider introducing legislation.

Mr. Wilson: I am sure that the Minister knows—as does everyone else with an interest in these matters—of the 30 per cent. reduction in the number of passengers in urban areas outside London and the 30 per cent. increase in fares. If the Tories regard that as a success story, they are welcome to it.
I am sure that the Minister's colleagues are anxious for parallels to be made with rail privatisation today. Will the hon. Gentleman tell us how many private operators run schemes offering discounted through-ticketing for journeys covering more than one operator's area?

Mr. Freeman: Almost without exception, in areas outside London, local authorities have sponsored and the

private sector now participates in, multi-modal travel-cards. That is true of Manchester, where representatives of the Manchester Metro are discussing with local authorities the introduction of a local travelcard. The hon. Gentleman was right about the reduction in patronage, but that has been happening since the second world war. There has been a gradual decline in the use of buses because people prefer the flexibility of using a car. We must face the challenge to halt and reverse that trend—Conservative policies will meet that challenge.

Roads (Pre-construction Procedures)

Sir Thomas Arnold: To ask the Secretary of State for Transport what plans he has to speed up the pre-construction procedures for roads.

Mr. MacGregor: I am committed to the faster delivery of road schemes and shall soon introduce a package of proposals to speed up statutory and administrative procedures for preparing road schemes.

Sir Thomas Arnold: Will my right hon. Friend confirm that there is an urgent need to speed up those procedures? Does he envisage reaching a stage where either amending or primary legislation will be necessary? Will he do everything possible to speed up the construction of his Department's proposed Stockport north-south bypass?

Mr. MacGregor: I think that my hon. Friend the Minister for Roads and Traffic has been answering parliamentary questions on my hon. Friend's latter point, which I have noted. I agree with my hon. Friend about the importance of speeding up the procedure. On average there is an interval of about thirteen and a half years between a scheme's entering a programme and finally being opened and 12 of those thirteen and a half years are spent discussing the route and giving all interested parties the right to argue their case. I do not wish to affect the rights of interested parties to do so, but I wonder whether the process needs to take an average of 12 years. Some proposals that I introduce may require primary legislation, but I am anxious to do as much as possible without such legislation.

Oral Answers to Questions — ATTORNEY-GENERAL

Bail Abscondees

Mr. Denham: To ask the Attorney-General what is the role of his Department in respect of securing the return of persons on hail who have absconded overseas.

The Attorney-General (Sir Nicholas Lyell): Provided that the absconder is in a country with which the United Kingdom has an extradition treaty, the prosecution authority prepares an application for extradition, where appropriate, which is then conveyed to the relevant Government.

Mr. Denham: Is the Minister aware of the widespread embarrassment and incredulity felt at the sight of the Lord Chancellor creeping across the border into north Cyprus to beg for the return to British justice of Asil Nadir, a major financier of the Tory party'? Does the Minister feel that it might be more appropriate for the Government's Law Officers to spend their time investigating matters and acting within their remit—for example, investigating the


possibility of illegal donations to the Tory party and ensuring that a watch is kept on small Dorset airfields so that other dubious financiers thinking of jumping ship at a difficult time for the country are unable to flee British justice?

The Attorney-General: The principal absconder in this case seems to be the hon. Gentleman, who has absconded a long way from the question.

Mr. John Marshall: Will my right hon. and learned Friend confirm that, in the case of Asil Nadir, the Serious Fraud Office frequently objected to bail, but the judges decided to grant it against those objections? Will he also confirm that no donations were made to the Conservative party by the late Robert Maxwell?

The Attorney-General: On the portion of the question relevant to me, I can confirm that the Serious Fraud Office initially opposed bail. Thereafter, questions of bail were a matter for the court.

Mr. Fraser: Members of both Front Benches must want Asil Nadir back to stand his trial. Was it on the right hon. and learned Gentleman's advice as Attorney-General or on the advice of the famous advisers in the Foreign Office that the Lord Chancellor—the head of the judicial service —went as a sort of Mediterranean bounty hunter to Rauf Denktash to try to secure the return of Asil Nadir, which seems a bizarre mission for a judge? Is not the right course of action to make it clear to the administration in northern Cyprus that it does nothing to help its authority or credibility if it allows northern Cyprus to be a refuge for bail bandits?

The Attorney-General: I am afraid that I cannot accept most of the premises on which the first part of the hon. Gentleman's question was based. But I certainly agree that it is the desire of hon. Members on both sides of the House that those who are accused and are to stand trial in the United Kingdom should appear at their trial so that justice may be done.

Mr. Stephen: Is it right that the United Kindom refused to extradite a wanted person to northern Cyprus on the ground that there is no extradition treaty between the two countries? Is not the right way to proceed to enter into an extradition treaty with the Turkish Republic of Northern Cyprus so that the whole matter may be put on a proper legal basis?

The Attorney-General: My hon. Friend forgets that we do not recognise the Turkish Republic of Northern Cyprus.

Mr. Alan Clark's Memoirs

Mr. Dalyell: To ask the Attorney-General what consideration he has given to the contents of Mr. Alan Clark's memoirs in connection with the disclosure of information covered by the Official Secrets Act 1989.

The Attorney-General: None. Former Ministers are required to submit their memoirs to the Secretary of the Cabinet before publication. Matters of national security are considered in accordance with the principles set out in the Radcliffe report of 1976, Command 6386.

Mr. Dalyell: On the content of Alan Clark's contribution, may I ask a question of which I have given

notice? Are Law Officers and Foreign Office legal advisers sure that our country has not contravened the 1989 convention on the rights of the child—which relates to what happens to children as a result of armed conflict—in the light of the fact that thousands of babies are literally dying weekly in Iraq as a result of sanctions?

The Attorney-General: I have seen a report of the hon. Gentleman's recent visit to Iraq. I am satisfied that the United Kingdom is complying with all its international obligations in this respect.

Mr. Rowe: Official secrets apart, will my right hon. and learned Friend give an undertaking that he will use his best endeavours with those Cabinet Ministers and former Prime Ministers who are in the business of compiling their memoirs to make them at least as vivid, prejudiced and entertaining as the memoirs which have been referred to hitherto?

The Attorney-General: An invitation like that causes me to think that my hon. Friend must be preparing something special.

Prosecutions

Mr. Jacques Arnold: To ask the Attorney-General if he will make a statement on the proportion of prosecutions which are brought to court.

The Solicitor-General (Sir Derek Spencer): Of the 1,433,858 cases finalised in the magistrates courts in 1992–93, excluding cases received for advice only and non-criminal proceedings, 70·5 per cent. proceeded to a trial or plea, 13·5 per cent. were discontinued, 8·2 per cent. were disposed of for other reasons, including failure to trace the defendant, and a further 7·8 per cent. were committed to the Crown court.
Of the Crown court cases, 88·1 per cent. proceeded to trial or plea, 8·1 per cent. were terminated and a further 3·8 per cent. were disposed of for other reasons.

Mr. Arnold: Is my hon. and learned Friend aware of the considerable disquiet among the public and the police about the determination of the Crown Prosecution Service strongly to prosecute cases?

The Solicitor-General: My hon. Friend will be aware that the Crown Prosecution Service was set up by the Prosecution of Offences Act 1985 as an independent prosecution service. It was given a new power under section 23 of the Act to discontinue proceedings and it does so without fear or favour. There is absolutely no reason or point in bringing to trial cases that will foreseeably fail. It is not in the interests of the victim, the defendant, the public and certainly not the police.

Mr. Ray Powell: Is the Minister aware of a Crown court decision taken last week by Judge Kilroy who sentenced a wolf-whistler to two weeks' imprisonment? The wolf-whistler, who whistled at one of my constituents—who was quite happy with the situation—is appealing against the judge's decision of 14 days' imprisonment for whistling in court. What will the Attorney-General do about that?

The Solicitor-General: That is not a matter for any of the Law Officers. It does not fall within their responsibilities.

Crown Prosecution Service

Mr. Burns: To ask the Attorney-General if he will make a statement on equal opportunity policy in the Crown Prosecution Service.

The Solicitor-General: The Crown Prosecution Service is an equal opportunities employer and recruits and promotes staff on merit regardless of race, gender or disability.

Mr. Burns: Does my hon. and learned Friend agree that it is enlightening that the Director of Public Prosecutions, the head of the Crown Prosecution Service, is female? Could he tell us more about the flexible practices that the CPS exercises to encourage and facilitate the employment of female staff?

The Solicitor-General: My hon. Friend is right. The Crown Prosecution Service is led by an energetic, dedicated and articulate Director of Public Prosecutions who was selected in open competition and was awarded her post on merit. There are many initiatives to make a post more attractive to women. Over 60 per cent. of people in the Crown Prosecution Service are women. About 40 per cent. of its lawyers, including 33 per cent. of principal Crown prosecutors, are women.

Oral Answers to Questions — OVERSEAS DEVELOPMENT

Sudan

Mr. Raynsford: To ask the Secretary of State for Foreign and Commonwealth Affairs what additional resources his Department is able to deploy to relieve famine and starvation in the Sudan.

The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. Mark Lennox-Boyd): On 18 March, my right hon. and noble Friend the Minister for Overseas Development made a further pledge of £4 million to support the work of non-governmental organisations and international agencies in Sudan.

Mr. Raynsford: Does the Minister recognise that the appalling suffering in Sudan demands firm and concerted international action? What are the Government doing to help to bring maximum pressure to bear on the Sudanese Government to respect the rule of law and the rights of all their citizens and to allow free and unfettered access by the international aid organisations to bring aid to those in need?

Mr. Lennox-Boyd: As my right hon. Friend the Prime Minister told the House on 6 May, the Government and, I am sure, the whole House, fully share the fears expressed by the hon. Gentleman about the suffering in Sudan. We have taken a leading role in measures adopted by the United Nations General Assembly and the Commission on Human Rights. We have warned the Sudanese Government in strong terms against further interference with the free passage of international aid. Only last week Dr. Garang, the SPLA leader, who was in London, was given a similar warning about those problems by officials from the Foreign and Commonwealth Office.

South Africa

Mr. Pike: To ask the Secretary of State for Foreign and Commonwealth Affairs what additional resources Her Majesty's Government have made available for preparation and training for the introduction of democracy in South Africa following the end of apartheid.

Mr. Lennox-Boyd: The objective of our aid programme is to help prepare black South Africans for a democratic and non-racial South Africa. We expect to increase aid to support the process.

Mr. Pike: The Minister will have had discussions with Nelson Mandela when he was in this country recently. Obviously, the date and the timetable for the election are likely to be announced soon. Will the Government respond rapidly to ensure that the black people who will form the majority Government in South Africa in the near future are given every possible assistance with their responsibilities after that election?

Mr. Lennox-Boyd: As I am sure the hon. Gentleman is aware, it has been declared that by 4 June the date should be set for elections that must take place before 4 June next year. If there are requests from the transitional executive council for assistance with election work they will he favourably considered by my right hon. and noble Friend when the elections take place. No doubt the hon. Gentleman is aware that we provide substantial assistance for the education of young South Africans. Some 1,000 scholarships a year are provided through funds from our bilateral programme, which assists towards the future of South Africa.

Mr. Ian Bruce: Does my hon. Friend agree that as funds in the Exchequer are tight, it is wrong to divert money from our overseas budget for humanitarian aid simply to help train people in this area? Surely our priorities must be carefully considered when money is so tight.

Mr. Lennox-Boyd: Priorities must always be carefully considered. I take my hon. Friend's point. Our aid in this area is, however, expected to rise to reflect support for the evolving political, economic and social reform process.

Sir David Steel: While paying tribute to the work done by the Westminster Foundation for Democracy in promoting multi-party democracy, does the Minister agree that, in its first year of operation, it has tended to bias its expenditure—perhaps necessarily—toward eastern Europe and the former Soviet Union? Will the Minister give an assurance that Government funds will now be directed to Africa in general and South Africa in particular?

Mr. Lennox-Boyd: There are many demands on the aid programme and the Westminster Foundation is a necessary ingredient of the aid programme. I have no doubt that the problems of South Africa and Africa generally will not be neglected.

Mr. Peter Bottomley: May I echo the remarks of the right hon. Member for Tweeddale. Ettrick and Launderdale (Sir D. Steel) about the Westminster Foundation for Democracy, having benefited from visiting South Africa under its auspices? There is much appreciation in South Africa for what this country and the European Community aid office is doing. Is it possible to


help refocus the South African Broadcasting Corporation? At present, it is not trusted and, as it will be the principal means of getting information to the people before the elections, it requires a degree of respect, which can only come with help from the World Service and the BBC in general.

Mr. Lennox-Boyd: I will ensure that my hon. Friend's point is carefully considered.

Mr. Meacher: Do the junior Minister and the Government recognise the huge reconstruction programme that will be necessary in South Africa, once the elections have been held, for housing, education, health and employment services for the black majority? Will the Minister give an absolute guarantee—which he did not give in answer to a previous question—that any aid and development moneys now focused on South Africa and sub-Saharan Africa will not be transferred to Russia or eastern Europe, where average per capita incomes are 10 times higher? Will he press for the early establishment of the transitional executive council and make it his policy that there will be no further offers of loans, tariff concessions, debt rescheduling, or any similar aid, until the transitional executive council is in place? Above all, will the Minister make it clear that the Government have learnt from the bitter lessons of Angola and Mozambique that transition to full democracy for the first time cannot be achieved on the cheap?

Mr. Lennox-Boyd: I am surprised by the tone of the hon. Gentleman's question. lie knows that the African National Congress has asked for the lifting of trade and financial sanctions upon formation of the transitional executive council. To suggest that, somehow, we should delay any further—which is the hint behind the hon. Gentleman's question—is quite absurd. When that happens we will be pressing for precisely that. We are planning new programmes at the moment in areas such as rural development, health and small business development. As the hon. Gentleman knows, we are opening a new development office in Pretoria on 7 June to manage aid to South Africa and some of the neighbouring countries. Surely that is a positive step in the direction that the hon. Gentleman wants.

Mr. Meacher: How much?

Mr. Lennox-Boyd: I cannot say how much and the hon. Gentleman knows that.

Mr. Jacques Arnold: May I counsel my hon. Friend to be sure that he does not rob Peter to pay Paul, particularly given our strong commitment to humanitarian aid and disaster relief? I wonder why we should commit funds so heavily to the introduction of democracy in South Africa when we must bear in mind the fact that the whole of Latin America., with the notable exception of Cuba, returned to democracy without great financial aid from this country.

Mr. Lennox-Boyd: I have not made any commitment at all; we are having a debate in which pressure is being exerted that we should.
I take my hon. Friend's point. I have made no commitments—I do not intend to—and this matter will be discussed in the light of questions today and other debates.

Tuberculosis

Mr. Corbett: To ask the Secretary of State for Foreign and Commonwealth Affairs what response he plans to make to the declaration by the World Health Organisation of tuberculosis as a global health emergency.

Mr. Lennox-Boyd: We share the concern expressed by the World Health Organisation about the increasing incidence and severity of TB. We are considering with the WHO and other Governments the resources that should be made available and how they might be used most effectively to help reduce the spread of this disease.

Mr. Corbett: May I encourage the Minister to make best speed with those considerations, given that about one third of the world's population is now infected with TB and that TB currently kills more people than heart disease and AIDS put together.
Is he aware that the World bank has estimated that the cure available for TB is one of the most cost-effective available? Does he accept that, unless the disease is also tackled in Britain and other industrialised countries—there is evidence of its coming back—there cannot be a cure in those countries where it is rampant: Latin America, Asia and Africa?

Mr. Lennox-Boyd: I fully accept the hon. Gentleman's alarm at the regrowth of the disease. I can accept the figure that he used—3 million deaths occur as a result of that dreadful disease each year. The United Kingdom is one of the largest sources of World Health Organisation extrabudgetary support. We contributed £11 million in 1992. We are anxious to see a better lead from the WHO in that regard, as the problem is of such great importance to the health of the world.

Bosnia

Mr. George Robertson: (by private notice): To ask the Secretary of State for Foreign and Commonwealth Affairs whether he will make a statement on the latest United Nations plan for Bosnia.

The Minister of State, Foreign and Commonwealth Office (Mr. Douglas Hogg): The Foreign Ministers of the United States, France, Russia and Spain, together with my right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs, met in Washington on 22 May and issued a statement containing a joint programme of action on the former Yugoslavia.
They agreed to continue working urgently to halt the conflict—starting with further action in the United Nations Security Council on safe areas, monitoring of the Bosnian border with Serbia-Montenegro and the establishment of a war crimes tribunal—and to continue efforts to achieve a negotiated settlement building on the Vance-Owen process and intensified international efforts.
They reaffirmed their view that sanctions against Serbia and Montenegro should be rigorously enforced until the conditions set out by the United Nations for their review are met, including the withdrawal of Bosnian Serb troops from territories occupied by force, including the withdrawal of Bosnia-Serb troops from territories occupied by force.

Mr. Robertson: I thank the Minister for his answer. However, such a radical and fundamental new policy shift on Bosnia should have merited a full Government statement and not just a reply to a private notice question.
I shall set out what we welcome in what was said in Washington on Saturday. First, it is right to make it clear that aggression against Macedonia will lead to grave consequences. Would that threat not have had a little more force if we could get round to using the name of the country that the Macedonians have chosen—"Macedonia" itself?
Secondly, we welcome the recognition that there should be a greater international presence in Kosovo to protect human rights in that province of former Yugoslavia. Thirdly, it is of course right that the flames of violence should not be further fanned by lifting the arms embargo on the region, and it is good that the effort to deliver humanitarian supplies will continue.
Having said that, can I ask the Minister precisely what is the plan? Is it a plan at all, or will it not simply be seen as a cleverly constructed and diplomatically phrased climbdown in the face of the Bosnian Serb rejection of their leader's signature on the Vance-Owen plan three weeks ago in Athens?
What has happened to that plan in the light of this new policy shift? Is this the end of that plan, which was so carefully and painstakingly put together by Lord Owen and Cyrus Vance for a multi-ethnic Bosnia-Herzogovina? Was Lord Owen consulted about what went on in Washington? What is his view about the new plan that has been unveiled by the five countries?
Will the Minister tell us about the new proposed safe areas? For whom are they to be safe? It appears that civilians in those areas will be disarmed and any air cover supplied or offered by the United States will be restricted to the UN troops in the areas. Of course, any protection

of the poor persecuted civilians in that area is welcome, but is not the proposal just a recipe for creating five or more new permanent refugee camps?
Why are we continuing to be so pathetically weak about continuing Croation aggression? Given the continuing actions of some Bosnian-Croat forces in Bosnia, surely the same ultimatums on sanctions that have been given to Belgrade should now immediately be aimed at Zagreb.
What is meant by "sealing the borders of Bosnia", when all it seems to amount to is what the communiqué says:
We are watching to see if the border closure is effective"?
How does that stand, especially in the light of Mr. Milosevic's apparent statement that there will be a veto on all foreign observers and monitors on the border?
What about the section of the communiqué entitled, "Further measures", which speaks of keeping
open options for new and tougher measures.
What precisely is meant by that? What are those measures and how can that be seen as a potent threat when the measures so far used, including sanctions, have been pursued with such a spectacular lack of success?
The Foreign Secretary said yesterday on the BBC:
The Bosnian Serbs need to realise that they are not going to be able to retain what they have grabbed by force.
I ask the Minister, quite simply, how? How will that be done? Can he tell us? Can anybody tell us how that will be achieved?
Finally, what can the Minister tell the House this afternoon, and how can he reassure an increasingly puzzled and suspicious world community, who, in the light of the new policy, may well now conclude that the standing of the United Nations has been gravely undermined and that the legitimate rights of the Government of Bosnia and the people they seek to represent have been abandoned?

Mr. Hogg: The hon. Gentleman has given me ample opportunity to amplify the Government's position, and I am grateful to him for that. On the question of Macedonia, he will bear in mind the fact that we fought for its admission into the United Nations. Some outstanding matters need to be settled, if possible, between Greece and Macedonia, and discussions are going ahead under the chairmanship of Lord Owen to promote that.
I am glad that the hon. Gentleman supported the Government's attitude towards not relaxing the arms embargo. I believe that that is right.
The hon. Gentleman asked a whole range of questions, to which I shall try to reply. However, it is important to keep in mind the fact that those on his Front Bench and those on this one agree on one thing—that it would be wrong to deploy United Kingdom or any other ground troops in a combat role. Certain consequences flow from that, and they are set out in the Washington agreement.
The hon. Gentleman asked me to explain the plan. I shall try to summarise the main elements of it—first, to continue with the humanitarian mission, which is well known to the House; secondly, to keep the sanctions in place until there has been a withdrawal from occupied territories; thirdly, the positioning of monitors on the border of Bosnia and Serbia; fourthly, the creation of safe areas—I shall say more about that in a moment; and fifthly, the setting up of a war crimes tribunal.
On the question of safe areas, we have made it plain that, if UNPROFOR troops in the safe areas are attacked, air assets will be deployed to support them. On the point about Lord Owen, he has been kept closely informed of developments, as the hon. Gentleman would expect. My


right hon. Friend the Secretary of State is in frequent contact with him. Lord Owen will express his views at a time that he thinks appropriate.
On Croatia, the hon. Gentleman has a good point. We are deeply concerned by the policy adopted by the Croatian Government, and the hon. Gentleman will see that there is an express reference in the declaration to the fact that sanctions could be deployed against Croatia if policies of military expansion were continued.

Mr. Patrick Cormack: Does my right hon. and learned Friend accept that the Bosnia that we voted to admit to the United Nations and whose legitimate Government we still recognise has lost about 250,000 people slain in the past year, 2·5 million displaced and countless thousands raped, and their homes pillaged? What comfort can his statement offer to those people? What signal about the powerful nature of the world order does it send out? Has not the west been tried and found wanting in the first test of the post-cold war era?
Can my right hon. and learned Friend do anything to reassure me that this is not a case of aggression rewarded? Can he do anything to reassure me that those who still sorely need protection will be afforded it?

Mr. Hogg: My hon. Friend is right to say that this is the greatest tragedy, the greatest crime, that Europe has seen since the end of the second world war. He has fairly asked me whether I can bring comfort. The answer is, I cannot —I wish that I could. What is going on in Bosnia is, in its principal characteristics, a civil war; and we did not think it right—nor did any other country of which I am aware —to deploy ground troops in a combat rule because this was and is a civil war. Civil wars cannot be resolved by the application of external force.
As to the future, we do not accept that the land seized by the Bosnian Serbs will remain theirs. That is why we intend to keep the sanctions on until there is a withdrawal from territories occupied—[Interruption.] Labour Members shout, "What about the Croats?" Them too. I have already made it plain that we think that the policies of the Croatian Government are deeply disturbing, and we have made it plain in the declaration that, if those policies arc persisted with, sanctions could be deployed against them too.

Sir David Steel: Does the Minister of State recognise why we view his statement about the belated creation of safe areas with total dismay? Does he riot recall that, when my right hon. Friend the Member for Yeovil (Mr. Ashdown) and my hon. Friend the Member for Inverness, Nairn and Lochaber (Sir R. Johnston) came back from Bosnia last August and argued for the creation of safe havens, they were told that that was quite impossible?
Now more territory has been grabbed from the Muslim communities, as graphically described by the hon. Member for Staffordshire, South (Mr. Cormack), and aggression by the Serbs is going to be rewarded under the agreement now being made—so the Minister will understand the anger in this quarter of the House.
Is it intended to create a United Nations protectorate of all Muslim areas? Is it intended that the United Nations on the ground will negotiate with the Serbs and Croats to achieve just and defensible borders in the future?

Mr. Hogg: The policy of the right hon. Member for Yeovil (Mr. Ashdown) has always called for a much more intense level of military activity than that which is now contemplated. The difficulty with the right hon. Gentleman's plan has always been that it has effectively called for the deployment of ground troops in a combat role. That is why it has not been possible to accept it. There has been no substantial support in this place or in any other country I can think of for the sort of policy that the right hon. Gentleman was advancing.
We certainly do not accept that aggression should be rewarded. We shall do our utmost in the ways that I have described already to get the Bosnian Serbs to roll back their occupation.
There are no plans for United Nations protected areas at the moment, but we will build on the Vance-Owen process, with the objective of providing security for the Bosnian Muslims and the rolling back of the Bosnian Serbs.

Sir Michael Marshall: My right hon. and learned Friend mentioned that further action would depend heavily on sanctions. I am sure he is aware that anyone who has consulted with the former Yugoslavia's neighbours in the past few weeks is fully aware of substantial concern over slippage and evasion. What are the chances of tightening the screw? Can my right hon. and learned Friend say a word or two more about the war crimes tribunal, and about the possible appointment of a human rights commissioner?

Mr. Hogg: I am confident that the Security Council will establish a war crimes tribunal, but one must make the point—unpalatable though I know it is—that one can only try people if one has them within the relevant jurisdiction.
Sanctions have been a great deal more effective than has commonly been allowed. The Serbian economy has been devastated by sanctions. It is true that they have not been as completely watertight as we would wish. In particular, at the turn of the year, consignments of oil got through. Since then, we have been most effective at tightening up the sanctions in the Adriatic, by toughening the rules of engagement; on the land frontiers, by positioning sanction advisory missions and securing agreement from adjoining states; and on the Danube itself, where there has been no substantial breach of the sanctions regime.

Mr. Max Madden: Is not the message of the agreement to aggressors and ethnic cleansers around the world, "Do your worst—you have nothing to fear from the United Nations and the international community, except bluster, dither and delay"? Does not the agreement represent a massive betrayal of the people of Bosnia—Muslim, Serb and Croat—who have seen their independent state literally go up in smoke? Does it not represent a massive defeat for the United Nations and the international community, and dash any hopes of establishing a new world order on this wretched globe of ours?

Mr. Hogg: No one can deny that we have seen both tragedy and a crime. It gives no one in this place any pleasure to know what the Serbs have done. That said, we must ask ourselves what we are prepared to do in the context of a civil war. Unless we—all nations—are prepared to deploy ground troops in a combat role, perhaps we should not embark on too much bluster.

Sir Anthony Grant: Is my right hon. and learned Friend aware that the Government are absolutely right to resist the military ambitions of some American and other television armchair warriors? Will he give an assurance that there is no question in future of British troops being further embroiled in a mad adventure which will not resolve a civil war but from which it might take years to extract our forces?

Mr. Hogg: I agree with a great deal of what my hon. Friend says. We will not deploy United Kingdom ground troops in a combat role. We have no plans at the moment to increase the number of United Kingdom troops in former Yugoslavia; nor have we any present plans to change the existing mandate.

Mrs. Margaret Ewing: While I recognise that many right hon. and hon. Members would like to pursue in greater detail many aspects of the Washington agreement, I want to ask specifically about the war crimes tribunal. Given that between 20,000 and 30,000 women have been raped, often systematically in rape camps established for that purpose, will the British Government ensure that the details that have emerged from the United Nations, Helsinki Watch and Amnesty International will guarantee that rape becomes a war crime and that there will be no amnesty for the perpetrators of that crime as part of any deal in reaching a negotiated peace settlement?

Mr. Hogg: Rape probably already comes within the definition of a war crime. It certainly is a crime. The problem, of course, is that we must have the people to try. We are supporting the establishment of the tribunal, but the tribunal will be able to try people only if it has jurisdiction over those people. It is extraordinarily difficult to solve that practical difficulty.

Sir Giles Shaw: Does my right hon. and learned Friend agree that the change that has been enshrined in the Washington agreement is a very substantial one? It was only a few weeks ago, was it not, that the Prime Minister of Greater Serbia, Milosevic, was able to put substantial pressure on the Bosnian Serbs.
What in the new agreement will lead to any restraint being placed on the Bosnian Serbs? Why, for example, will they still retain the right to determine who should be the United Nations monitors and where they should go? What is it that has been positively gained for those who live in the Bosnian Muslim communities over what has been offered, and apparently grabbed, by the Bosnian Serbs?

Mr. Hogg: I shall make three replies to my hon. Friend. First, we have clear unity of purpose. That is very important. It is through our collective strength that we have any chance at all of reversing aggression. Secondly, we have the concept of safe areas and the agreement to use air action to defend UNPROFOR troops should they be attacked within those safe areas. Thirdly, there is the stated principle, to which we shall adhere, that we shall not accept the annexation by force of the ground now occupied by the Bosnian Serbs, and that the sanctions will remain in place until there is a withdrawal from territory thus taken.

Mr. David Winnick: Has the Minister any idea at all of the strong, understandable and angry sense of betrayal that is felt by the Government of Bosnia

and the people they represent? Does the Minister not understand that this is not a victory in any way for dealing with aggression? It is a victory for appeasement, it is a victory for excuses, it is a victory for allowing the aggressor to get away with it.
Despite all the right hon. and learned Gentleman's talk today about war criminals being punished, and the rest of it, the sad truth is that this is a decisive defeat, not only for the people who live in Bosnia, unfortunately, but for the international community and for the United Nations. All of us should be very ashamed of what has occurred.

Mr. Hogg: Yes, indeed, I understand the sense of pain and despair that is felt by the Bosnian Muslims. All of us in this place share much of that. What we have seen is a very brutal crime, and we have been unable to reverse it in the way we would have hoped to do. But the plain truth is —we come back to it every time—that in its essential characteristics this was a civil war. It is virtually impossible, by the application of external force, to put an end to a civil war.
The hon. Gentleman says, impliedly, that we should have done a great deal more than we did. I do not accept that criticism, but that is his point. We cannot use United Kingdom ground troops, for example, in a combat role unless the country is solidly behind such a venture. The truth is that it is not, and there is not such an opinion in this House either.

Mr. John Wilkinson (Ruislip-Northwood): My right hon. and learned Friend said that sanctions will continue to be applied against Serbia for so long as the Serbs hold territory that is not rightfully theirs. Does that mean that Royal Air Force aircraft will continue to be deployed in theatre to maintain the air exclusion zone over Bosnia for so long as the sanctions endure?
My right hon. and learned Friend also spoke in a notably unspecific way about air action and air assets and United Kingdom ground troops. Does that mean that, if United Nations troops are attacked in the safe areas, Royal Air Force aircraft will be used in action against ground targets—in other words, in a combat role?

Mr. Hogg: On my hon. Friend's first point about how long the RAF will remain engaged, the RAF is there at the moment, along with other air forces, to enforce the no-fly zone. So long as there is a no-fly zone in place and there is the risk of breaches which might cause serious combat, it will be necessary to maintain some air enforcement.
On the question of enforcement against targets which are attacking UNPROFOR troops, my hon. Friend will know that the Government have already said of the Canadians in Srebrenica that we would rally to their support if the company were attacked by the Serbs. We are making it plain that air forces will be used to defend UNPROFOR troops should they be attacked in the safe areas designated in the resolution.

Mr. D. N. Campbell-Savours: May I take us back to where we were 12 months ago when the horror began? Why, after 12 months, are heavy munitions still firing on major centres of population in the former Yugoslavia? Why has that heavy equipment not been taken out?

Mr. Hogg: We come back to the point that I have stressed many times. We are talking about a civil war, and the question that the hon. Gentleman, along with everyone


else, must contemplate is the extent to which British military assets, or any other country's military asets, people, troops and airmen, should be used to prevent fighting in a civil war. There is no will in the House for that.

Sir Peter Tapsell: May I put it to my right hon. and learned Friend that, in view of the fact that no NATO country was prepared to put combat forces on the ground in this deeply tragic situation, this seems to be much the most realistic plan so far, and the first that seems to offer some hope of ending the killing, and that it therefore cannot be regarded as wholly contemptible?

Mr. Hogg: I am grateful to my hon. Friend, and I agree with him.

Mr. Donald Anderson: We all know what the Vance-Owen "plan" is or was, but what, if anything, does the Vance-Owen "process" mean, especially when it is not specifically endorsed by the two men whose names it bears?

Mr. Hogg: That is a fair question. The Vance-Owen plan had within it a range of specific agreed elements, agreed at least by most of the parties, although not by the Bosnian Serbs. The Vance-Owen process has a mechanism for negotiating. I agree that it is not the same thing, but that is the difference.

Sir Terence Higgins: Is it not yet clear that, if the international community makes it plain time and time again that, whatever happens, it will do nothing to stop the Serbs, the Serbs will go on doing exactly what they will? Is my right hon. and learned Friend aware that is not a civil war? Is he further aware that it is absolutely clear that the Serbs will break their word again and again?
In that context, is it riot wholly inadequate merely to monitor what is happening on the border between Serbia and Bosnia, and is it not clear that effective action should be taken to ensure that the embargo on the flow of arms and resources across the border is enforced, not ineffectively monitored?

Mr. Hogg: My right hon. Friend has identified a problem that is inherent in democracies. People rightly ask of Governments what their policies are. If I were to flannel or deceive the House, my right hon. Friend the Member for Worthing (Sir T. Higgins) would be the first to blame me. Indeed, I would be not only blamed but thoroughly criticised. In open societies—in democracies—it is jolly difficult to pursue policies other than those that one declares—or, to put it differently, one must declare what one proposes to do.
As to whether this is a civil war, it is primarily a civil war. I do not dispute for one moment that Serbia plays a prominent part in supplying fuel, arms, money and men, but it is nevertheless in its essential characteristics a civil war.
My right hon. Friend said that the Bosnian Serbs and the Serbs themselves were likely to break their word. I should have thought that there was an extremely high probability of that. That is why, when one is considering the cost in terms of human lives of trying to make peace by force, one must come to the conclusion that it would take about half a million men.

Mr. Harry Barnes: Why cannot United Nations policy be seriously built on so that

the safe havens become proper safe havens, in which the population is defended, and so that the safe havens can be extended to other areas to defend people, irrespective of their ethnic background? The borders with Croatia, as well as the borders with Serbia, should be not only monitored but controlled. Should we not look to the establishment of a United Nations transitional authority?

Mr. Hogg: I agree that the policies of the Croatian Government are a matter of considerable concern, first because they have supported the Bosnian Croats, and secondly because we are anxious to see a renewal of the UNPROFOR 1 mandate in Krajina. Some of the remarks made by President Tudjman are not very assuring on that point.
On safe areas, the resolution will define a number of towns in Bosnia in respect of which we shall introduce UNPROFOR troops. As the hon. Gentleman knows, air forces will be employed to defend those troops should they be attacked.

Mr. Harry Greenway: Will my right hon. and learned Friend confirm that, notwithstanding the open-ended need for help and support for the United Nations operations in Bosnia, the British Government's operation has cost between £70 million and £100 million? What other substantial contributions in cash terms have been made by the 150-odd other members of the United Nations?

Mr. Hogg: My hon. Friend will appreciate that, if I were to give a detailed answer, I might take a longish time. My hon. Friend is saying—I entirely agree—that the British have made the most considerable troop contribution in Bosnia. We have delivered more than 36,000 tonnes of supplies, and the RAF has delivered more than 7,000 tonnes of supplies. It is universally agreed that the British service men, both the troops and the RAF, are by far the most efficient of any forces operating within Bosnia.

Mr. Andrew Faulds: Would that the Foreign Secretary were here so that I could tell him to his face that he should be ashamed of himself for having put his name, and Britain's name, to this absolutely atrocious Washington agreement which totally abandons the Bosnian Muslims. What minute prospect is there of the Bosnian Serbs being forced to abandon their conquests?

Mr. Hogg: My right hon. Friend the Foreign Secretary has heard the hon. Gentleman on many previous occasions. I shall tell him that the hon. Gentleman has said what he has said previously.

Mr. Julian Brazier: As somebody who witnessed some horrible scenes in another civil war only three years ago, may I put it to my right hon. and learned Friend that, even if the will existed in the House and in the country to send a large ground force to Bosnia for an indeterminate period, experience from other similar cival wars, whether in Palestine or now in Nagorno-Karabakh, suggests that the most likely outcome would be a complete and bloody failure?
The best way forward and the best hope for the Bosnians in the long run is for us all to recognise that there is no putting Bosnia back together again against the wishes of the Serbs and the Croat Bosnians who form a majority of the population. We need an ethnic partition, as has happened in Cyprus.

Mr. Hogg: My hon. Friend has deployed clearly, and in my view rightly, the arguments against deploying ground troops in a civil war. On the second part of his question, we now need to build on what has been agreed within the Vance-Owen peace plan, and to use that process to try to carry forward a chance of a settlement.

Mr. Robert N. Wareing: Does the Minister agree with me that there is always a risk that the conflict will spread again to Krajina and to Kosovo and Macedonia and that that risk would become an absolute certainty should there be massive intervention by the west in Bosnia-Herzegovina, because it would give succour to all the extreme forces, including extreme forces among the Albanians in Kosovo? Those who think that there is a simplistic way out of the problem in Bosnia should think before they speak. Were the detention centres discussed? How are the detainees to be released?

Mr. Hogg: I believe that the hon. Gentleman has had an opportunity to see some of the things that he has described. I agree with the broad premise that there is a serious risk of the fighting flowing into the adjoining countries, particularly Macedonia and Albania. The risk in Kosovo is very great indeed. That is one of the reasons why there is now a Nordic battalion in Macedonia and why there are CSCE observers in Kosovo. I would like to see the numbers of the latter increased. It would be better by far if we were able to get the United Nations presence into Kosovo. However, that would depend on the acquiescence of Serbia.

Mr. Peter Hardy: For month after month, the Government have rightly supported the policy of sanctions. However, for month after month, the Government have also gone along with the European view that breaches of sanctions shall remain entirely confidential. Do the Government really believe that the policy of sanctions as opposed to war can ever prevail if that sort of attitude is maintained? May we ask whether that information can now be released as a matter of urgency?

Mr. Hogg: The policy of sanctions has been a great deal more effective than the hon. Gentleman allows. As I said earlier in response to this private notice question, the policy of sanctions has caused very considerable damage —as it was intended to—to the Serbian economy, and that will continue until there is a withdrawal from the territory that has been occupied.
With regard to the question of confidentiality, I am not absolutely clear about what the hon. Gentleman is referring to. There is one serious problem: quite often, we receive information about sanction breaches from very confidential channels. It would be extremely difficult to release that information without impugning the source. That is the problem. If there are other problems which the hon. Gentleman feels that I have not addressed in my reply, I am happy to talk to him about that.

Mr. Malcolm Wicks: Is it not the case that, when the fine diplomatic words are put to one side, the new piece of paper adds up to a policy of appeasement? Surely the Minister should understand that, just as appeasement did not work 50 years ago, Europe's policy of appeasement today will not stop aggression, mass rapes or genocide?

Mr. Hogg: While there are clearly close parallels in moral terms between what has happened in Bosnia and what happened in Germany and as a result of Nazi policy, it is very wrong to regard Serbia as posing anything like the kind of strategic risk that Germany posed to Europe in the 1930s. Therefore, it is unwise to talk about appeasement in that sense. We are not embarking on a policy of war. By a range of policies, involving substantial pressure, we are seeking to get the Bosnian Serbs to withdraw from the territory that they have occupied.

Several hon. Members: rose—

Madam Speaker: Order. We must now move on. I have an application under Standing Order No. 20 from the hon. Member for Upper Bann (Mr. Trimble).

Bombing (Northern Ireland)

Mr. David Trimble: I beg to ask leave to move the Adjournment of the House under Standing Order No. 20 for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
the sequence of bombs in Northern Ireland over the weekend.
I appreciate that it is normally the practice in the House not to have immediate statements or debates on specific terrorist incidents, because that amplifies the terror created by those incidents. However, we are dealing not with "a" specific incident, but with a quite alarming series of incidents, which perhaps marks a new phase in the terrorist campaign, and it has serious implications for people in Northern Ireland.
The incidents to which I refer are, first, the bomb on Thursday in Glengall street in the constituency of my hon. Friend the Member for Belfast, South (Rev. Martin Smyth), which seriously damaged the opera house and other commercial premises, as well as the headquarters of the party.
On Saturday morning, a massive bomb containing more than 1,000 lb of explosive went off in the main street of Portadown in my constituency. That bomb may result in the demolition of nine or 10 major commercial premises. The explosion took place right in the centre of the town. The so-called warnings that accompanied the bomb were consistent with an attempt by the Provisional IRA to cause massive loss of life. Thankfully, that was avoided, thanks to the skill of the police, but no thanks to the terrorists. Substantial dislocation has occurred as a result of the bomb.
That was Saturday morning. On Saturday evening, a large bomb exploded at the Drumkeen hotel. In addition to damaging the hotel, the bomb damaged several private homes, some of which were just recovering from the last explosion a matter of months before. Lastly in the sequence, last night there was a massive bomb in the town of Magherafelt in the constituency of my hon. Friend the Member for Londonderry, East (Mr. Ross). Again, it occurred in the town centre and caused massive disruption to commercial life.
The bombs obviously have security implications. In deference to your views, Madam Speaker, I shall not go into the security implications at this stage, except to say that a debate under Standing Order No. 20 would require Northern Ireland Office Ministers to come to the Dispatch Box and give some statement and some answer instead of their shameful silence, which demonstrates their ineptitude and incompetence.
The blockbuster bombs are part of the IRA's economic war. It has been estimated that the compensation bill will be about £20 million. The bombs will also affect the lives and livelihood of many small business men in the towns affected. For that reason, and because in recent months there has been a tendency among people at home to despair of the political process, I wish to have this urgent debate.

Madam Speaker: I have listened carefully to what the hon. Member has said. Of course, I have to give my decision without stating any reasons. I am afraid that I do not consider that the matter that he raised is appropriate for discussion under Standing Order No. 20. Therefore, I cannot submit his application to the House.

Rev. Ian Paisley: On a point of order, Madam Speaker. Perhaps you could help Members from Northern Ireland. Over and over again, when atrocities have been committed and there has been no response from the relevant Ministers answerable in the House, we have attempted to use Standing Order No. 20 and the old Standing Order No. 10 to bring the matter to the attention of the House. Habitually, the applications have been turned down by various Speakers before you.
Could you help Northern Ireland Members to know what must happen, what atrocity must take place, how many people must be murdered and how many millions of pounds' worth of damage must be done before we can bring the matter before the House?

Madam Speaker: I understand the hon. Gentleman's real concern about the matter, which he has voiced for several years. As he appreciates, and, I know, understands, we do not discuss security matters across the Floor of the House.
May I draw the hon. Gentleman's attention to two things? When we return from the recess on 8 June, there will be a debate on the emergency provisions Act. For an earlier opportunity to raise the matter, the hon. Gentleman can make an application to my office before 10 o'clock this evening for an Adjournment debate on Thursday this week.

Mr. Dennis Skinner: A few years ago, it was common practice that terrorist atrocities, either here or in Northern Ireland, were the subject of either a statement or a private notice question. In the application for a Standing Order No. 20 debate today, we heard a plea from a member of one of the Northern Ireland parties which agreed a few years ago to stop the discussion of any private notice question or statements by Ministers. There was an agreement between the Government and the Opposition to be silent about such atrocities. Some of us disagreed with that at the time.
We cannot accept the idea that, when people are killed in terrorist attacks of whatever nature, the House cannot debate the matter. It is ironic that the demand for a Standing Order No. 20 debate has come from a member of a party which took part in the silencing. Despite the House being silent, terrorist activities have continued to take place both here and in Northern Ireland. So the silence has not served any useful purpose. It is time we got back to discussing such matters.

Madam Speaker: Order. The hon. Gentleman is trying to prolong a discussion. This is not a point of order. I have already dealt with the matter in connection with the point of order earlier.

Scott Inquiry (Evidence)

Mr. Jim Cousins: On a point of order, Madam Speaker. My point of order arises from evidence given this morning by Sir Hal Miller to the Scott inquiry, which raises very serious matters for the House concerning the information with which the House is provided, and the deception of the House and its Committees.

Madam Speaker: Order. The hon. Gentleman gave me notice of his point of order, and my office informed him that he was raising a serious matter that might involve a possible contempt of the House. I know that he takes that seriously, as I do. If he will write to me providing the information that he has, I shall certainly ensure that it is dealt with in the usual way in the event of there being a contempt of the House. The hon. Gentleman should not pursue the matter now, on the Floor of the House.

Mr. Cousins: I shall be guided by you, Madam Speaker.

STATUTORY INSTRUMENTS, &c

Madam Speaker: With permission, I shall put together the motions relating to statutory instruments.

Motion made, and Question put forthwith pursuant to Standintg Order No. 101(3) (Standing Committees on Statutory Instruments, &amp;c.).

NATIONAL HEALTH SERVICE

That the National Health Service (Fund-holding Practices) Regulations 1993 (S.I., 1993, No. 567) be referred to a Standing Committee on Statutory Instruments, &c.

That the Harefield Hospital National Health Service Trust (Transfer of Trust Property) Order 1993 (S.I., 1993 No. 820) be referred to a Standing Committee on Statutory Instruments, &c.

INSOLVENCY

That the Insolvency (Amendment) Rules 1993 (S.I., 1993, No. 602) be referred to a Standing Committee on Statutory Instruments, &c.

EDUCATION

That the Education (Individual Pupils' Achievements) (Information) (Wales) Regulations 1993 (S.I., 1993, No. 835) be referred to a Standing Committee on Statutory Instruments, &c.

That the Education (School Curriculum and Related Information) (Amendment) (Wales) Regulations 1993 (S.I., 1993, No. 998) be referred to a Standing Committee on Statutory Instruments, &c.

FISHERIES AND COMMITTEES

That the Local Fisheries Committee (Fees for Copy Byelaws) Order 1993 (S.I., 1993, No. 116) be referred to a Standing Committee on Statutory Instruments, &c.

EC AND SAN MARINO

That the draft European Communities (Definition of Treaties) (Agreement on Customs Union and Cooperation

between the European Economic Community and the Republic of San Marino) Order 1993 be referred to a Standing Committee on Statutory Instruments, &c.

HOUSING

That the draft Castle Vale Housing Action Trust (Area and Constitution) Order 1993 be referred to a Standing Committee on Statutory Instruments, &c.

That the draft Tower Hamlets Housing Action Trust (Area and Constitution) Order 1993 be referred to a Standing Committee on Statutory Instruments, &c.

CRIMINAL JUSTICE

That the draft Criminal Justice Act 1988 (Designated Countries and Territories) (Amendment) Order 1993 be referred to a Standing Committee on Statutory Instruments, &c.

DRUG TRAFFICKING

That the draft Drug Trafficking Offences Act 1986 (Designated Countries and Territories) (Amendment) Order 1993 be referred to a Standing Committee on Statutory Instruments, &c.

FORFEITURE ORDERS

That the draft Criminal Justice (International Cooperation) Act 1990 (Enforcement of Overseas Forfeiture Orders) (Amendment) Order 1993 be referred to a Standing Committee on Statutory Instruments, &c.

CIVIL DEFENCE

That the draft Civil Defence (General Local Authority Functions) Regulations 1993 be referred to a Standing Committee on Statutory Instruments, &c.—[Mr. Robert G. Hughes.]

Question agreed to.

RAILWAYS BILL [Money] (No. 2)

Queen's Recommendation having been signified—

Resolved,
That, for the purposes of any Act resulting from the Railways Bill, it is expedient to authorise the payment out of money provided by Parliament of the following, namely—

(a) any sums required by a Minister of the Crown or Government department for the making of payments under or by virtue of the Act to the trustees or administrators of any pension scheme;
(b) any sums required by the Secretary of State for defraying expenditure of the Franchising Director—

(i) in exercising or discharging functions assigned or transferred to the Franchising Director under or by virtue of the Act;
(ii) in fulfilling guarantees given in the exercise of any such function; or
(iii) otherwise in consequence of the provisions of the Act;
(c) any sums required by the Secretary of State for making payments under agreements under which he undertakes to make payments to goods service operators in respect of track access charges;
(d) any sums required by the Secretary of State for making grants to the Board, or any wholly owned subsidiary of the Board, for the purpose of enabling the Board or subsidiary to make any payments (whether by way of repayment of principal or payment of interest or of any other description) in respect of loans made to the Board or subsidiary under section 20 of the Transport Act 1962.—[Mr. Robert G. Hughes.]

Orders of the Day — Railways Bill

As amended (in the Standing Committee), considered.

[MADAM SPEAKER in the Chair]

Ordered,
That the Railways Bill, as amended, be considered in the following order, namely, New Clause No. 3, New Clause No. 29, Amendments relating to Schedule 10, other New Clauses, other Amendments to the Bill, New Schedules, Amendments relating to other Schedules to the Bill.—[Mr. Robert G. Hughes.]

Madam Speaker: I have to announce a small addition to my provisional selection of amendments. In the group beginning with Government new clause 4, amendment No. 237 should be inserted immediately before Government amendment No. 110. The selection list in the Lobby already shows the change; I have made the announcement merely to help hon. Members who may have picked up an earlier version.

New clause 3

RIGHTS OF TRUSTEES OF BOARD PENSION SCHEMES

'(1) Where the Secretary of State proposes by order to amend the trust deed of any existing Board pension scheme, or the rules of any such scheme, or any other instrument relating to the constitution, management or operation of any such scheme and has consulted the trustees of the scheme but does not propose to act precisely according to their advice, he shall prepare a report setting out the advice received from the trustees and his reasons for rejecting, or accepting with modifications, that advice.

(2) Any such report shall be published and copies thereof laid before each House of Parliament.'.—[Dr. Marek.]

Brought up, and read the First time.

Dr. John Marek: I beg to move, That the clause be read a Second time.
I think that it is a good new clause, and I hope that the Government will accept it. I also hope that you will allow me to move the new clause formally at this stage, although I may seek to catch your eye later, Madam Speaker.

Madam Speaker: With this new clause, it will be convenient also to discuss the following: New clause 29—Joint industry pension scheme—
'.—(1) Subject to subsection (2) below, the Secretary of State shall not exercise any of his functions under this Act relating to pensions until he has consulted the trustees of any existing scheme (within the meaning of Schedule 10) and such other persons as may have an interest, or appear to the Secretary of State to represent persons having an interest in any existing scheme, as to the feasibility of establishing a joint industry scheme, the form such a scheme might take, and the implications for participants in existing schemes.
(2) Subsection (1) above shall not apply in any case where the trustees of a scheme have received actuarial advice that the fund may not he able to meet any of its actual or projected liabilities at any time from its actual or projected assets.'.
Government amendments Nos. 106 and 107.

Amendment No. 190, in clause 25, page 26, line 42, at end insert—

'(6) The Franchising Director shall not enter into a franchise agreement unless he is satisfied that the franchise operator will offer pension rights to future employees no less favourable than those provided by the Board pension scheme.'.

No. 253, in clause 116, page 112, line 22, after '(1)', insert
'Subject to section (Joint industry pension scheme)'.

Mr. John Prescott: Recently, Madam Speaker, you informed the House of the tragic death of Robert Adley, the former Member of Parliament for Christchurch. On a day featuring both Transport questions and the beginning of a transport debate, it is appropriate for us to place on record our respect for his memory and his contribution to transport debates—and, in particular, his views on the railways. Although those views were controversial, it is to his credit that they were always well informed and added to hon. Members' knowledge of such matters.
Robert Adley was an independent-minded Member of Parliament and a distinguished Chairman of the Select Committee on Transport. His judgments were reflected in the recent Select Committee report on rail privatisation. Those views, too, were controversial, and will lie at the heart of our debate over the next two days. Undoubtedly, the controversies will continue; I think that he would want them to, and would listen with a smile—as I did yesterday, when I heard the Secretary of State quote Mr. Adley on the Frost programme yesterday. I am sure that many of us will quote him in future. The Secretary of State said:
as far as Robert Adley is concerned, whose loss we all deeply regret, I think it's interesting that the report which he had actually drawn up concluded … 'the government is right to give a high priority to seeking ways of improving the quality of rail services offered to both passengers and freight customers and the government is justified in examining as one possible method the scope for expanding the role of the private sector.'
That is right, and it was mentioned in the report of the Select Committee. The late Robert Adley would have asked the Secretary of State to complete the quote, and it is important for me to put it on record for him. It continued:
provided that this can be done without jeopardising the cohesiveness of the national network and the benefits it provides.
That interpretation lies at the heart of today's debate.
There are differences of opinion on the issue. The House must be grateful for the contributions made by the late Robert Adley.
The controversy continues with today's debate, particularly in respect of pensions. Recently the newspapers have contained many pieces about how important the Bill is and what it will do for the railway industry. Clear differences of opinion have been expressed, not just between the Opposition and the Government, but between Conservative Members. Much attention has been given to whether concessionary passes should be granted and whether British Rail should have the right to bid for the franchises.
We should give attention to the question of how to treat the pensioners. It is a controversial issue, which is why we have chosen to start the debate with it. It is particularly important to do so as the Secretary of State formally moved the money resolution which will affect the Transport Act 1980 as it relates to pensions. Therefore, it seemed logical to begin the debate with a discussion on pensions. I am grateful to my hon. Friend the Member for


Wrexham (Dr. Marek) for moving new clause 3. The resolution that affects the 1980 Act will implement one of the Government's changes of heart on pensions that occurred during their discussions.
I am prepared to concede that the Government have made considerable changes after listening to representations, but I do not think that they have made the fundamental change that the new clause is designed to achieve. Some of the changes relating to pensions that have been made have been welcomed by Members—both Opposition and Government—who pressed for them in Committee. Today we can judge whether the promises given by the Minister of State in Committee will be realised, particularly those relating to pensioners who belong to the closed fund—200,000 British Rail pensioners currently receive pensions from the British Rail pension fund. They are worried that the changes will make them worse off. We must make a judgment on that issue in today's debate.
Pensioners have been worried by what happened in the Maxwell and other cases. Companies have begun to realise that surpluses have accrued and have, apparently, claimed the right to use them as they think fit. Sometimes, they have done so with the agreement of the trustees. That has often meant that the chairman—whether an independent chairman or someone appointed by the company management—has used the surplus funds for other reasons. Sometimes they have used them to fund redundancies in the industry or to relieve the financial difficulties of a company during a recession. Such cases have caused a climate of fear about what is happening to pension funds. The Goode committee has been established, and the Select Committee on Social Security is considering pensions. Our present debates are made difficult because we do not yet have the conclusions of those committees. Therefore, we must press ahead with debating the Government's proposals.
The British Rail pension fund is massive, being worth about £8 billion. The Post Office and Coal Board funds are also of the same magnitude. Large amounts of assets have been deposited in the funds which are available to pensioners or to contributors. The Government have contributed to British Rail, a publicly owned industry. The resolution means that the Government will continue to contribute to the fund, which is important.
I remember when British Rail was largely funded under an unfunded system, which was common to the public sector and applied under Labour and Tory Governments. The police forces and hospitals still operate under the same system as, I think, do firemen. The Treasury has an obligation to make payments to the pension schemes, but they are not funded schemes. In 1980 it was agreed to apply the funded scheme system to British Rail. The then Minister, who is now Home Secretary, believed that the fund should no longer be the responsibility of the Government. The Government will make their contributions to the funded schemes—a yearly payment which was agreed at that time and which we now agree should continue. The schemes are of considerable size and are of interest to the Treasury.
When the Government privatised the gas, electricity and telecommunications industries, they were faced with the question of what they should do with the pension

funds. There has not been a consistent approach to that. In the main, those industries did not involve multi-operators —they have usually had only one or two operators so the pension liabilities have been split between them. In the announcement today, we are presented with the possibility that the rail industry will have multi-operators who will have obligations under the Government's reorganisation scheme for apportioning the fund's assets.
Much of our complaint about the difficulty of meeting the assurance for pensioners comes from the Government's chosen way of reorganising the industry. The tax authorities have decided that the assets must be apportioned to each of the operators. Because of that difficulty and decisions that have been made, I do not think that we will be able to meet the Government's essential commitment—that pensioners in the present British Rail pension scheme will be no worse off than they are at present. It is not possible to meet that promise and that is why we have tabled this amendment.

Mr. William O'Brien: Does my hon. Friend accept the representations that I have received from many pensioners in my constituency who belong to the railway pension fund expressing the same concern as that of my colleagues about the future security of pensions and the bonuses that the pensioners used to receive? Does he accept that that is the real concern? I hope that he will press that on the Government.

Mr. Prescott: That is the heart of the argument and I shall come to it in a moment. We must bear in mind that public pension schemes were good and, as the Secretary of State said, well managed. Because of the scale of the fund, the management of the assets—an important point is the distribution between equity and gilts—was able to put more faith in equities than gilts because gilts were not paying a great deal under this Government. Certainly, management was able to get a better rate of return under the equity arrangements. That has meant that they have had a better pay-out system.
It has been argued by employees in the privatised industries that they accepted a lower rate of pay in return for better pension provisions. They made a decision in the long term to accept a better pension provision, yet live with a lower rate of pay compared to what they may have received in the private sector. We must bear that judgment in mind when we ask whether the Government's proposals, which were announced as late as Thursday, meet the requirement that the present pensioners will be as well off in the future as they were in the past.
The concerns and failures in the past have caught up, as we have seen in the transport industry. If we look at British Rail or deregulation of the buses, evidence abounds that the break-up of the pension funds—the redistribution of the surpluses often to the management of the companies and not the employees—left the remaining employees in that industry with much inferior pension schemes. The whole purpose appears to be not to treat such schemes as a level playing field for the payment of pensions but to encourage competition for the provision of pensions, which inevitably drives down the benefits and they take the cheapest option available.
There is much evidence of that in the parts of British Rail that were privatized—catering, Travelfare, hotels and engineering. Originally, employees were told that they would be no worse off with regard to their pensions. I will


not weary the House with quotes from the industry—I did that in Committee—but the evidence is absolutely clear. That evidence persuaded the Government to keep at least some semblance of an industry-wide scheme, instead of breaking it into bits and parts. The retention of an industry-wide scheme is generally agreed and accepted, although it does not provide all the assurances that we want. I shall come to that in a moment.
Many charges have been made that the scale of the resources available is such that it will make it an attractive proposition to the Treasury. The Government have responded and said that that is not true. Their original proposition, which rapidly changed in Committee, was to have a pension fund for the existing pensioners. There are about 200,000 pensioners, and 130,000 people are still in active employment. If those assets were sequestrated and payment made by the Government instead of under a funded scheme, assets of about £4 billion would be eyed by the Treasury. It could take the money to ease its £50 billion debt on the public sector borrowing requirement and simply meet the pensioners' requirements year by year. It would not be cheap for the Treasury to do that but it would certainly ease the PSBR difficulties which will continue to increase. The money in the British Rail pension fund must look attractive, as do the billions in the pension funds of British Coal and the Post Office.
4.30 pm
Although it cannot be shown that the Government would make money from selling British Rail, perhaps they have their eye on the gold pots in the pension funds. But those funds do not belong to the Government, and that was the Government view in 1980. To take that money from pensioners and contributors, even by changing the law to do so, amounts to robbery. The proposed legislation appears to make it easy to take that money. It is an Italian solution and that is not acceptable. The funds have been built up by the enforced savings of workers and they belong to them and to no one else. That is a straightforward proposition and it is our approach to the matter.
The resources of £8·5 billion have been used to pay inflation-proof pensions and have provided real value. The Minister and the Secretary of State have agreed that the pension funds have other attractive features. The Bill has seen many changes. In Committee, we tabled many amendments to clause 116, which deals with pensions, and on the morning that the Committee met the clause was removed. It was agreed to wait for a new schedule but, during debate on the Bill, three different schedules, reflecting Government thinking on the hoof, were introduced. They wanted to pinch back their contributions under the 1980 Act, which amounted to about £70 million a year.
The money resolution shows that the Government have changed their mind about ratting on their £70 million a year contribution to the pension fund. Under the 1980 Act, the Government were obliged to pay that amount each year. The Secretary of State looks surprised. I shall give way to him if he wishes to intervene. He does not. Perhaps the little look of surprise was just for the telly.

The Secretary of State for Transport (Mr. John MacGregor): There has been no change at all as I shall explain later. We clearly set out a variety of options in a

consultation document in January, and said that we would recognise our commitment in the money resolution. We have recognised that commitment from the beginning.

Mr. Prescott: The Government had intended that there would be no future commitment under the 1980 Act. The money resolution must be to change something and, if it does anything, it must restore the position that we thought existed under the 1980 Act—an obligation to pay. My hon. Friend the Member for Bradford, South (Mr. Cryer) debated the money resolution on Second Reading, and presumably it suggested that the obligation under the 1980 Act would end. That is the only reason for a money resolution at this stage. I am thinking on my feet, but what else would it he for?
In Committee we discussed the Government's obligation to pay and, for whatever reason, the Government have decided to continue to pay the £70 million a year. The only reason for the debate is that the Government were thinking of discontinuing their payments, otherwise what the hell are we talking about?
Under the 1980 Act, the Government offered the pensioners two options. They said, "If you take option 2, we shall consider that we have an obligation to pay your pension." The fund could then be closed and, presumably, the assets could go to the Government. The Government have now announced that they will not continue with option 2 because they believe that the pensioners have decided, after consultation, that that is not the option that they wish to pursue.
Option 1 would allow the fund to remain in the scheme and take its chance on future payments. The hon. Member for Eastleigh (Mr. Milligan) tabled an amendment to option 1 because he wanted a guarantee that the pensioners would not be any worse off and that whatever assets were apportioned would be sufficient at least to guarantee the same payments and benefits as those given under the British Rail scheme in its new form. The hon. Member for Eastleigh has been fighting on a fair point, but I do not believe that he has secured that guarantee. He has to buy a pig in a poke and believe a Government promise —a tricky thing to do in this day and age. I do not think that that promise offers sufficient protection for his constituents, who made it clear that that is the guarantee they want from the Government.
Last week, the Government said in a parliamentary reply that they wished to honour that agreement. They have not gone out of their way to do that. Whether it will be honoured, I do not know—perhaps the Secretary of State could give an assurance about that. The difficulties that we are having over the pension fund have come about solely because the tax authorities have decided that, if one wishes to keep the railways and Railtrack as independent bodies and set up private companies, they believe that there is nothing in common between those companies and that, therefore, there cannot be an industry-wide scheme unless the assets of the pension fund are apportioned. The difficulties and uncertainties are arising out of that decision. That is what we must address.
The Minister has said that option 2 is not acceptable. Last Thursday we received a parliamentary reply in which he made it clear that option 2 was not acceptable and that he would concentrate his mind on option 1. This would mean that, instead of allowing pensioners' money to be kept in a separate fund, and protected from any other influence, that money could now remain in the British Rail


industry scheme. Because of that promise, option 1 now turns out to be worse than option 2 because at least under that option the Government guaranteed that the pension would be inflation free. The Government said that, whatever the inflation rate, they would see that the pension was paid. Now, there is no such continuing obligation.
What pension fund can guarantee that it will be able to pay out pensions inflation free? It has to look at the circumstances of and the return on its investments and the balance between equities and gilts. It cannot know for sure what will happen. For example, consider the actuaries' assessment of the British Telecom fund. Everyone thought that it had a massive surplus. Now we are told that, for a number of reasons, it is not judged to be in surplus by the actuaries. The judgment of the last assessment in 1990 showed earnings of between 1·5 and 2 per cent. less on equities than they received. So, to that extent, the fund is in real difficulties in maintaining a surplus. The growth in the economy has not been as great as predicted. The actuaries made a judgment—based on what the Government had told them—believing that the recession was over and the green shoots were coming up. Well, they got it wrong, and clearly many others have as well.
The number of redundancies that have occurred in the country mean that liabilities have increased considerably, especially where pension funds are being used to fund redundancies. British Coal has made a controversial application to use the pension fund to fund redundancies. Consideration is also being given to using the British Rail pension fund to fund redundancies or to finance management buy-outs. That is unacceptable and I hope that the Secretary of State will make it clear that the fund will not be used to fund management buy-outs or to fund any redundancies that might be associated with the reorganisation. If that were to happen, funds would be taken away from pensions and used for industrial reorganisation. I think that the House would find that totally unacceptable. The Goode committee is addressing that issue and I hope that the Select Committee on Social Security will also want to make it clear that that is not a realistic proposition.

Mr. Stephen Milligan: I am having a little difficulty following the hon. Gentleman's argument. A moment ago he said that option 2 amounted to robbery by the Government. Now he is saying that it is a rather more attractive option than the Government's option. Will he explain that? Is he aware that the trustees have said that they are extremely pleased with the announcement that the Government made on Thursday?

Mr. Prescott: As the hon. Gentleman knows, I am talking to the trustees, just as he is. What I am saying is quite consistent with what the trustees have said to me. Perhaps the hon. Gentleman will allow me to progress with the argument about the difference between option 1 and option 2. That argument is important for the pensioners and for those who wish to vote tonight.
We all thought that the guarantee on inflation sounded attractive, but the pensioners rejected that for a number of reasons. They have always received benefits which are greater than inflation, so they do not want anything less. Now, there is no guarantee on inflation and the scheme will pay only on a promise of what is given in the total

fund. That will be possible only if the assets in the fund can meet the commitment. If the industrial fund cannot pay, I am sure that the Government will not step in and meet the difference between what the closed fund's obligations are and what it has to meet those obligations. There are real difficulties.
The hon. Member for Eastleigh is right to point out the dilemma, but the problem is that we shall not know whether the Government are pinching the assets until we see the regulations that will arise from the Bill. The Government have made it clear that the industry-wide single fund will not remain. People will stay in that for a while, but the Government have argued that, because the number of pensioners is greater than the number of full-time employees, instability may occur in the fund. One may wish to separate it completely from the fund—its management, its liabilities or its commitment. That is a fair point, but we shall not know for sure until the order comes before the House.
We have to buy a pig in a poke. In Committee, the hon. Member for Eastleigh voted against the opportunity to put into statutory form the promise that he has made to his constituents. We were told to wait until Report. We are here, and now we are told—as I told the hon. Gentleman in Committee that we would be told—that we should wait until some other time. We cannot judge the Government's intention until we see the order, but the House will not be able to amend that order. All that we can do is vote for or against it after a one and a half hour debate. We had to fight to get that.
Originally, the Government intended that the regulations should be set out in orders that would be drawn up in what we call the negative form, which meant no guarantee of a vote. We has to get the Government to change that. I have no doubt that the Treasury, whose hand is behind all this—it has little to do with the Department of Transport—does not want a debate that will allow justice and fairness to come into our judgment about the distribution of money.
The hon. Member for Eastleigh has to decide whether he will rely on the promise from the Secretary of State and accept the regulations or whether he will vote tonight to ensure that the rights for which his pensioners are asking are to be guaranteed and controlled by the trustees. At the moment, the only obligation on the Secretary of State is to discuss those matters with the trustees.
My hon. Friend the Member for Wrexham tabled a new clause to deal with that matter. All the signs are that the Government may wish to accept it. I hope that they do, because it will ensure that the trustees are consulted. I want to go much further than that. I want to give the trustees who are appointed by the contributors the right to make decisions themselves and to be able to say that if they believe there are sufficient funds to meet the obligations to pensioners, they will continue to meet those obligations. They should not have to accept an order from the Government telling them to separate, and should do that only if there is an instability in the fund and the actuarial authorities say that a position cannot be maintained. That is fair enough. If the actuarial authorities have come to that judgment—we cannot know what will happen in the next 10 years—we shall have given them that authority in pension legislation. However, if they do not do that, what right have the Government to make a judgment about defaulting on those agreements?
The Minister said in Committee that people could pay into the pension fund in the same way as firemen, nurses and the police pay into theirs. In the language of pensions, that means an unfunded scheme. That means that the assets that will be transferred with the pensioners will be available to somebody. They may stay in the pension book as part of the public sector financing and, even if the money is not directly transferred to the Treasury, it will become part of the assets against the public sector borowing requirement liabilities. Even if it is kept in a separate fund, the liability over the long term for pensioners will be a yearly payment.
The £4 billion worth of assets will be discounted in public funancing under assets and liabilities. It would achieve for the Treasury what it wants. I think that that is the whole purpose of the exercise. The Government did not do that when they sold off the electricity, gas and water industries because they were making quite a lot of money selling those industries. The Treasury was the main beneficiary of that. In this sell-off, they will get no money for the industry. We know from the consultants' report and what the Minister has admitted that it will cost the country more to run a railway industry under privatisation, for many reasons, including bureaucracy, profits, and paying people. Where will the money come from? It will come from the pensioners, from the pots of gold that do not belong to the Government. We disagree with that.
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The Minister told us in Committee that the Bill will ensure no less favourable future pensions benefits. If he looks at how the pension fund is managed and at what he promised in his reply, he will find that the very nature of the funds is such that, under the options, he will have to agree that they will not be in a position to meet some of their obligations. For example, there may be instability in the fund. We have made it clear that if there is instability, the actuarial authorities and the trustees should tell us.
Our difficulty is that we do not trust the Government. We believe that, by breaking up the pension fund industrial scheme, they will weaken its ability to earn the right kind of income with the right kind of balance between equity and gilts—more loaded towards the former than the latter. The breaking up of assets, proposed solely to meet the privatisation of rail, will weaken the structure of the pension fund. The nature of gilts is that one gets less of a return, although it is more certain. The problem with equity is that, while one may get a bigger return, one will take a bigger gamble. If the fund is large enough to take the risk, as has been the case with the pension fund, it can get a greater benefit with that balance than from buying only gilts, on which many pension funds rely. If that is the case, the fund will not be able to meet the extra values that are over the rate of inflation. That is the nature of the fund.
Another important factor about the fund is that its contributions meet its commitments. Therefore, it has never had to sell off assets. It has been able to live from its returns. It one changes the balance—it is about 80 per cent. equity and 20 per cent. Gilts—and splits the assets in the way suggested, the balance will be switched to 80 per cent. gilts and 20 per cent. equity. The consequences for the pension fund and its" earnings will be considerable.
The fund will not be able to meet the extra benefits that people have got used to. Therefore, the promise that they will be no worse off will not be met and those in the closed

pension funds—the ones with whom we are more materially concerned—will suffer most. Unless the Government say that they will apportion the assets to the closed pension funds—that is, to existing pensioners—and that if the existing railway fund pays better benefits, greater than the earnings can justify under the closed pension fund, they will make up the difference and meet that commitment, they will have made a blue chip promise. We would accept that. I do not think that they will say that. They will say that it is nothing to do with them, and the splitting up of the assets and the breaking up of the security of the fund will mean that the commitment cannot be met.

Mr. Milligan: The hon. Gentleman is right to say that a proper allocation of the pension fund assets is absolutely crucial. However, his argument about the balance between gilts and equities was the same argument that he used in Committee against the previous proposal for a closed fund. The whole point of the Government's new proposal is that combining existing pensioners with those who continue to work for the rump British Rail—and therefore continue to pay contributions—will enable the trustees to continue to invest in a mixture of equities and gilts, as they have done previously.

Mr. Prescott: An essential point is involved in this argument, which I hope the Secretary of State will clarify. The pension scheme will still be a closed fund; it will simply be managed by the industry fund. Assets will be allocated to existing pensioners, but they will not continue in the broad strength of the industry fund—[Interruption.] I want the Secretary of State to clarify the issue. My understanding is that the assets will be apportioned, probably under an order laid in the House, but eventually it will be a closed fund. In fact, I understand that that will happen before 1 April 1994, when most of the changes will occur. That closed fund, with its own assets, will be managed by the industry fund, so it will have the limitations that I have described. I agree that I have difficulty making my remarks today consistent with what I said in Committee, but that is because the Government have changed their position again. They constantly change position and we have to live with that. The hon. Member for Eastleigh knows that there have been changes virtually from day to day, so we do not have sufficient time properly to consider them.
Will the Secretary of State confirm that the assets will be broken up and given to the closed fund under an order laid in the House—which we assume he will lay before April 1994—so the possibility of the fund meeting its commitments will be determined by how much money the trustees can earn from the balance of assets and equities in the fund. That is a powerful judgment. Bigger funds have a better chance of achieving that. As a fund becomes smaller, the judgment becomes more difficult.
We must bear in mind what happens with closed and open funds. With an open fund, contributions come in and contributions go out. With a closed fund, no contributions come in other than the fund's earnings. There is no revenue from employee contributions. If the earnings of the fund are less than the amount paid out in benefits in the industrywide scheme, the fund cannot meet them. Indeed, no actuarial authority would allow it to be so unless the Government guarantee to meet the shortfall. They will not give that guarantee.
The hon. Member for Eastleigh may be satisfied with the Secretary of State's promise, but the assets may not live up to that promise. We will not know until the order is laid. I ask the hon. Gentleman to join with us tonight and support us in trying to ensure that if there is a difficulty, the judgment will be that of the actuarial authorities, not of the Secretary of State. I would prefer the judgment to be in the hands of those who have to justify their action rather than in the hands of a Secretary of State who will simply bring a one-and-a-half-hour order before the House and bulldoze it through. There would be no justice for the pensioners in that.
I say to the hon. Member for Eastleigh, beware of what the Treasury is doing. It is after the assets in the pension fund, but they do not belong to the Treasury. The hon. Gentleman has a choice tonight: he can either join us in trying to effect an insurance policy to protect the pensioners or he can accept the rhetoric of his Secretary of State, who gives him promises but nothing to back them up.

Mr. MacGregor: I join the hon. Member for Kingston upon Hull, East (Mr. Prescott) in his opening remarks about our late colleague, Robert Adley. As we embark on this Report state, we are all conscious of his very sad death. He took a great interest in all transport matters. I and, I am sure, all hon. Members pay tribute to him for all that he achieved. He had a deep knowledge of and passionate commitment to transport, but his greatest enthusiasm was for railways.
The hon. Gentleman said that Robert Adley and I had differences of view on some aspects of our proposals for the reform of British Rail. I quoted the key passages on television yesterday—

Mr. Prescott: Why not all of them?

Mr. MacGregor: Because it was a short programme. I should have been quite happy to quote all the passages, on many of which Robert Adley and I agreed. Indeed, about four fifths of the Select Committee's recommendations have been accepted either in whole or in part. There is no doubt that Robert Adley made a very constructive contribution and we agreed on many matters. We disagreed about vertical integration and one or two other issues, but it is possible to have two different but genuinely held views about vertical integration.
The most important point is that Robert Adley brought his great knowledge to the House with great enthusiasm. He was a bubbly character. I had the pleasure of sharing an office with him when I first came to the House. He did not just serve the House well on transport matters; he served the House with distinction in many other ways and he will be greatly missed. I am sure that we all wish to convey our heartfelt sympathies to his widow Jane and his family.

Mrs. Gwyneth Dunwoody: Those of us who served with Robert Adley on the Select Committee learned to appreciate his total commitment to transport and his clear view about privatisation. I want to put on record the fact that we believe that the enormous work that he did on the Select Committee report and the pressures that were brought to bear on him unfortunately and undoubtedly had some effect.

Mr. MacGregor: I certainly hope that that was not the case, but that underlines the detailed work that he put into the Select Committee—and, indeed, into every other cause in which he believed.
The Government are prepared to accept, in principle, the intentions behind new clause 3 and amendment No. 2, tabled by the hon. Member for Wrexham (Dr. Marek). They require a report to be published and laid before the House before an order can be made to amend the trust deed for the rules of any existing board pension scheme, contrary to the advice of the trustees.
It will not surprise the hon. Gentleman to know that I cannot recommend acceptance of new clause 3 as drafted, for three technical reasons. First, it would sit better as a paragraph in schedule 10 rather than as a complete new clause. Secondly, the phrase "existing board pension scheme" is not defined in the Bill, whereas "existing scheme" is defined in paragraph 1(1) of schedule 10. Thirdly, I am advised that it would be unwise to use the word "precisely" in primary legislation. Who can judge what "precisely" means? In any case, it would be better to publish the trustees' advice, whether or not it is accepted.
I assure the hon. Gentleman that it is my intention to accept the clear spirit of the new clause and the amendment. I assure the House that the Government will be in close touch with the trustees on such matters and will wish to bring their views to the attention of the House when laying any relevant draft statutory instruments. We would also wish to explain the reasons for not wholly accepting their advice. Of course, that position may never arise; it is hypothetical.
I want to give further thought to the best method of achieving the intentions of the new clause, both in publication and announcement, and to bring forward a suitably drafted amendment at a later stage in the other place. I give a firm undertaking to do so. I hope that, with that assurance, the hon. Gentleman will not wish to press his new clause.
I cannot be quite so charitable to the hon. Member for Kingston upon Hull, East. I welcomed his opening remarks, which acknowledged the Government's position on so many of the issues in our final pension proposal, agreed and announced last week. However, that greatly contrasted with his quite outrageous remarks on "Newsnight" on Friday night and on "Breakfast with Frost" yesterday. He repeated some of those comments in his later remarks today. He said on "Newsnight"—I shall leave out a tiny bit of the quote—[Interruption.] All right, I shall read the whole quote. He said:
So the only money that's available—and there is money available in the railways, Post Office and the Coal Board—is in the pension funds, something like £4 billion in each one of them, and what the Government is about to do is to raid the pension funds of £4 billion each.
The hon. Gentleman said on "Breakfast with Frost" yesterday:
Something like £8 billion belongs to British Rail pensioners and they are carving up the pension funds to get £4 billion off the pensions and into the Treasury.
Those remarks were outrageous on two counts. First, his remarks were not true; it was scaremongering of the sort to which we have become accustomed in recent months, especially with pensions. Secondly, he raised quite unnecessary fears and concern among vulnerable sections of the community—British Rail pensioners who are dependent on their British Rail and state pensions.
From the beginning, I have gone out of my way to make it quite clear that the Government have no intention of doing what the hon. Gentleman has suggested, yet even after he saw the published proposals on Thursday he continued to repeat his allegations. I can only assume that he had not read our conclusions on Thursday. I should like to take him through the facts because they are terribly important.

Ms Glenda Jackson: If the right hon. Gentleman's statement on Friday was so important and comprehensive and would have stilled pensioners' fears, why did he not come to the House to make it? Why did we have to discover it in a written answer at the back of Hansard?

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Mr. MacGregor: We were informing the House of our conclusions so that we could hold this debate today. I want to make the position absolutely clear. I gave a pledge at the outset, and I have repeated it in the House more than once, that British Rail's pension funds would not be used for any purpose besides paying pensions. In January, we produced our pensions document. It was clearly a consultation document in which we raised a number of issues and outlined two main options. It cannot be argued that we have done a U-turn or effected any changes since then. What is the point of offering options and going out to consultation unless, ultimately, we make a decision on one or other of those options?
The two main options were the closed fund in due course and a Government offer of a guarantee of index-linked pensions to all British Rail pensioners. We offered pensioners a fair and open choice. The hon. Member for Kingston upon Hull, East put his finger today on the difference between British Rail's privatisation in respect of pension funds and the privatisation of electricity. As he rightly said, the area board structure of electricity meant that the employees involved in that industry were not to be split up into all sorts of different organisations, so there was no need for a variety of pension funds. The hon. Gentleman rightly identified the fact that the Inland Revenue would not allow employers to cross-subsidise or deploy cross-arrangements as between one pension fund and another. That Inland Revenue rule is designed to avoid the risk of unfair treatment in the use of taxation.
Clearly, then, with British Rail we were faced with a situation that was not paralleled by electricity. We therefore had to find another solution. That is why, genuinely, fairly and openly, we offered these two alternatives to existing pensioners. It was not possible to say that they could for all time participate in open funds in which employees also participate because, with a large number of pension funds, and the large number of British Rail pensioners whom the hon. Gentleman correctly identified, that could overwhelm some of the new pension fund arrangements for employees. That is why, under the first option, in due course the fund has to become a closed fund.
In order to assure pensioners that there was an alternative of a guaranteed index-linked pension—all this is spelt out in the document—we offered the same sort of arrangements to British Rail's existing pensioners as obtain for the civil service. Clearly, the Government cannot undertake the liabilities that would arise in this

respect without the transfer of the assets that were available in the pension fund to meet the pensions in the first place. I have had discussions with the pension trustees and with a great many others since the document was produced in January. They have recognised straight away that assets have to flow if liabilities are being incurred. If the Government, therefore, were to offer guaranteed index-linked pensions, they clearly had to have the right assets to pay for them. The process would be carried out independently, based on actuarial advice on all sides. That is why it was outrageous to say that the Government were going to purloin pension funds and use them for other purposes.
But the issue went further than that. Having consulted widely, I came to the conclusion that, as the second option, which had been fairly offered, was not favoured by most of those who responded to the document—a few did favour it—and as most preferred the first option, it was right to accept the option that most people wanted. That is what we announced on Thursday and it meant that there was no possibility, on Friday, Sunday or today, of the hon. Member for Kingston upon Hull, East correctly arguing that the Government were taking over pension fund money to use it for other purposes.
Even so, the hon. Gentleman went on putting out his scare story, and at one point this afternoon he did it again. I want to ask him an important question—important from the point of view of pensioners. Given the background that I have outlined and the fact that the first option is the one that we have chosen, there can be no case for saying that the Government are taking 4 billion away from the pensions and putting it into the Treasury. I ask the hon. Gentleman to withdraw that allegation because it is not in the interests of pensioners or of anyone else to believe it. I invite him to withdraw it, now or at the end of the debate—

Mr. Prescott: I shall deal with it at the end of the debate.

Mr. MacGregor: I hope that the hon. Gentleman will then be able to reach agreement with me on various other aspects of pensions, too.
I want to talk about our conclusions based on the consultations that we held with trustees, the British Railways Board, large numbers of pension organisations and the rail unions. The Minister of State and I met the unions at least twice, and we have certainly consulted widely. That those consultations were genuine is shown by the fact that our conclusions met at least 90 per cent.—probably more—of the requests put to us. We could not accede to one or two of them, but the reasons for that were understood. I was grateful to my hon. Friend the Member for Eastleigh (Mr. Milligan) for what he said about the pension trustees' approach to what we have done. They understand how far we have gone to meet all their concerns.
It would never be—it never was—any part of my purpose to take away from pensioners any of their pension funds. I understand only too well how important pensions are to them and to existing employees. That is why I was anxious to reach the best possible arrangements within the terms of the new reforms.

Mr. Prescott: The right hon. Gentleman has said that people who are existing employees of British Rail and who go to another employer in the reorganisation will still


belong, if they want to, to the British Rail fund—that is described as an indefeasible right. The industry welcomes that. Can the right hon. Gentleman, however, assure us that that right is not time limited? A document sent to his Department suggests that it might be.

Mr. MacGregor: If people choose to stay in the joint industry scheme, they can do so—that is the indefeasible right. I am happy to make that clear.
As requested by almost all the interested parties, we will set up a joint industry scheme for the railways to succeed the British Rail scheme. I know that that has been widely welcomed. We have made it clear that staff serving when the Bill gains Royal Assent will have a right to remain in the scheme while they are still in the railway industry. That is what is meant by an indefeasible right—the right of existing employees to remain in the joint industry scheme. Both it and any scheme subsequently set up by employers must offer benefits no less favourable than those in the existing scheme to people who are members of the scheme when the Bill gains Royal Assent. There will be no penalties for involuntary breaks in employment. The matching of additional voluntary contributions—known as the British Rail additional superannuation scheme—will continue, and there will be safeguards for pension funds when franchises change hands. That is a clear set of commitments to employees.
As for new employees entering the railway industry, it will be for employers to negotiate their own arrangements with them. The hon. Member for Kingston upon Hull, East has tabled an amendment on that aspect, but as he did not refer to it, I shall not do so either now—but I make that point clear.
On pensioners, I have already said that we are going for option 1, so there is no question of any funds being transferred to the Government in return for a Government commitment on a guaranteed, inflation-proof pension. It is correct to say that pensioners will eventually enter the closed scheme—I will explain why later—but they will remain with British Rail employees in the short term and the closed scheme will be managed as part of the joint industry scheme.
The funds will continue to be managed by representative trustees, as now. The division of the funds to reflect the trustees' liabilities and decisions will occur in due course, after a new revaluation. A revaluation is currently under way, and clearly we must wait for it to be completed. I make it absolutely clear that the fund splits will he based on independent actuarial advice, as one would expect. As the hon. Member for Kingston upon Hull, East said, Government contributions under the Transport Act 1980 will continue. I shall explain shortly the purpose of the Ways and Means resolution and the new clause that has been tabled.
We have met fairly well, with one exception, the main requests made of us. The orders for putting those schemes into effect will be subject to statutory consultation with the trustees—I will refer again to that point in relation to the hon. Gentleman's amendment—and to affirmative resolution of both Houses.
I cannot accept new clause 29 and the consequential amendment No. 253, because there is no need for them —the purpose has been covered already. The concept of the joint industry scheme is wanted by everyone whom we

consulted. In particular, the British Railways Board and the railway trade unions were keen for such a joint scheme, which they felt could best continue to provide the benefits that staff already enjoy. I made clear in my written answer last week, as earlier, that the scheme will be established.
Consultation with the board and with the trustees has already begun and will continue until the joint industry scheme is formally established. We make it clear in the Bill that Parliament will have an opportunity to debate the statutory order establishing the scheme, because all such orders will be subject to the affirmative resolution procedure. If the trustees disagree with any part, then, in the spirit of the hon. Gentleman's amendment, we will report to Parliament and that will be reflected in an amendment in another place.
The hon. Member for Kingston upon Hull, East referred to the aftermath of the Maxwell affair and to the Goode committee. He made a fair point, and I understand the concern among pensioners as a result of that affair. My constituents have been affected and I have had many surgery and other discussions with them. That is why I was particularly cross that Opposition Members tried to stir up unnecessary fears among pensioners.
When the Goode committee reports, the timing will be such that we should be able to take into account those recommendations that are accepted in any of the arrangements when we come to deal with the orders. In other words, I hope that we will be able to reflect that committee's recommendations.
New clause 29 is therefore redundant. We have already given our commitment to consult and that consultation has already begun. This afternoon, the hon. Member for Kingston upon Hull, East made different points—and they are not relevant to the new clause. I do not see how it would achieve the objective that he set himself this afternoon. It is therefore redundant in more than one way.

Mr. Prescott: The Secretary of State will know the difficulty of devising acceptable new clauses. If he will take that new clause together with many amendments, he will see that we chose to make one principal point—that nothing can move on the right hon. Gentleman's order unless the actuarial authorities say that there is instability. All the other points are embodied in later amendments. Given the limited time available for debate, we cannot discuss them all because there is much to cover in two days —as the Secretary of State knows from our negotiations.

Mr. MacGregor: I know also that pensions are very complicated. As to actuarial instability, the actuaries must address that key issue when they come to the eventual split of the funds. They would not want to establish a closed fund that was inherently unstable. Clearly, the trustees will be watchful on that issue.
As to the "no less favourable" question, I will be completely fair with the hon. Gentleman.

Mr. Prescott: This will be the first time.

Mr. MacGregor: I am always fair with the hon. Gentleman. I hope that he will be fair and withdraw his accusations later.

Mr. Prescott: There would be no reason.

Mr. MacGregor: The hon. Gentleman knows that his accusations were wrong—but I suppose that it would be a precedent for him to withdraw them, knowing that he is wrong.
I want to be fair about the hon. Gentleman's specific point. He rightly explained why we could not distribute the pension liabilities of existing pensioners around a whole series of funds. We had to find another solution, and we offered two options. The solution adopted is to move eventually to a closed fund.
The hon. Gentleman tried to argue that that would not give pensioners a "no less favourable" commitment—but by that, we mean retail prices indexed. Also, if there is a surplus in the fund at any time, the trustees can decide what can be distributed from that surplus. There is never any guarantee about a pension fund's future performance, but there are 60 closed funds in British Rail at present. Their history is good and they have been able to find surpluses, despite the issues that the hon. Gentleman raised as to the balance between equities and gilts—I well understand that point, which is why we are allowing time for moving to a closed fund.
We have found the right solution and the one that pensioners, pension fund trustees and others want. We have gone for the closed fund because that is the only way under the new arrangements. The hon. Gentleman's new clauses would not make any difference.
As the hon. Gentleman did not raise amendment No. 190, I will not refer to it, but I revealed that we could not accept it.
As to Government amendments Nos. 106 and 107, we have already said that we intend to continue payments in support of the historic underfunding of British Rail pension schemes. The purpose of the amendments—this touches on the hon. Gentleman's point about the Ways and Means resolution—is to take account of changes in future pension arrangements that will occur on privatisation.
It is a matter not of changing our mind and deciding to continue the Government's commitment to payments to support that historic underfunding but of recognising that we had to make changes to the Bill to enable that commitment to continue under the new arrangements. Having realised that, we needed a Ways and Means resolution to put the amendments forward. That is the reason and no other. It is actually quite technical.
As the hon. Gentleman said, those support payments date back to the 1974 capital reconstruction of British Rail, when the Government decided that British Rail would be unable to meet all the pension liabilities inherited under the Transport Act 1962 and therefore assumed responsibility for funding the unfunded portion of the pre-1975 pension obligations. I am sure that the hon. Gentleman is with me so far; this can get a little complicated.
Those obligations included pensions, the cost of some early retirement schemes and the provision of cost-of-living increases for pensioners from some early BR schemes that had no provision for index linking. The method of payment of Government support was changed by the Transport Act 1980 because the Public Accounts Committee criticised the previous system, particularly on the ground that it involved payments being made in advance of need.
Payments are therefore currently made on an emerging cost basis—[Interruption] I am talking about the PAC, not the public sector borrowing requirement, and about the propriety of Government funding. Payments were made on that emerging cost basis so that the Government's contribution is made only as and when payments are made to pensioners. Those arrangements can be changed again only by further primary legislation. Payments made since 1981 total £1·3 billion at present-day prices. I hope that the hon. Member for Kingston upon Hull, East acknowledges that that is a substantial contribution.

Mr. Prescott: But it is an obligation.

Mr. MacGregor: I grant that, but it is a very large contribution.
Under the 1980 Act, a determination was made of the unfunded proportion of pre-1975 liabilities of each of the funds. The determinations were on a once-and-for-all basis. There is no provision for further determinations under the 1980 Act, regardless of whether the state of the funds' assets has changed. That was deliberate, so that British Rail would have an incentive to manage the funds effectively.
Why do we need to make these changes? As the 1980 Act stands, we have no powers to make periodic payments to other than a British Rail pension scheme, as defined under the Act, nor to make once-and-for-all payments to pay off the remaining liability to any scheme. We might want to do that, for example, where that liability to a scheme with a few and a diminishing number of members is very small. It makes sense to do that.
Another problem is that at present when a transfer value is paid to another scheme on an employee leaving British Rail, any unfunded proportion of the transfer payment is reimbursed immediately to the transferral scheme. I have a detailed brief, which I could read out, but it may be simpler if I tried to explain it in my own words. This is to meet the Public Accounts Committee's point.
If the existing scheme changed to the new arrangements under the joint industry scheme, technically speaking that would be a change. Therefore, the overall lump sum payment would have to be made at the moment, although underlying it there would be no change at all in the liabilities. That would certainly be criticised by the Public Accounts Committee. That is why we have made the changes.
It is to overcome these difficulties in the new arrangements that our proposed amendments will allow for varying the method and timing of payment to individual schemes, or in respect of different classes of member within a scheme. I do not need to weary the House, unless any hon. Member wishes to ask me questions, with precisely how that will be done. However, the fact is that that is all that the amendments seek to do.
The amendments would reverse the action that was taken by the Government in 1980 to respond to criticisms by the Public Accounts Committee about how the support payments were being made at the time, particularly in relation to the very small payments point. I can, however, reassure the House that the primary reason for amending the 1980 Act is to ensure that the bulk of the payments can continue to be made, whenever practicable, on the present pay-as-you-go basis.
I hope that the House will accept our amendments. I have already said why I am unable to accept the amendments and the new clause that the hon. Member for Kingston upon Hull, East wants. The most important point about the debate, and why I am glad that it is taking place so early on Report, is that it enables me to give the reassurances that pensioners and employees were seeking about their pensions and to emphasise that in the decisions that we have now announced we have met the vast majority of the representations made to us.
The pension trustees have acknowledged that we have approached this issue extremely fairly. I fully understand and completely sympathise with the concerns of pensioners about their pensions. I hope, therefore, that the hon. Member for Kingston upon Hull, East will withdraw and not repeat the shameful allegations that he has made.

Mr. John Heppell: I have to declare an interest, as I did in Committee. I am an ex-British Rail employee. I am also a deferred member of the British Rail pension scheme. I am grateful to the Secretary of State for telling me that I should now be reassured by what he has told me, but I must say to him early in the debate that he has not reassured me.
I was told that I could speak on my interest in the pension scheme, because it is not significant enough to prevent me from speaking and voting. However, my pension is significant to me. It will decide what happens to me in the future. It will be my security for the future. It is significant to me and to hundreds of thousands of others like me. It may be the deciding factor in whether I live in relative comfort in my old age or in poverty.
I do not take kindly to having to discuss my personal finances in front of the House of Commons and the country and I consider it to be in very bad taste that the Secretary of State has made me do so. I disagree even more with the fact that the Secretary of State and the Minister for Public Transport should feel that they can tinker with my pension without my express permission.
It is important to recognise to whom this pension belongs. It does not belong to the Government; it does not belong to my hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott); it does not belong to the hon. Member for Eastleigh (Mr. Milligan). It belongs to me and to the other pensioners. If that fact is recognised, all these matters are put into their proper context.
Over a year ago I thought—naively when I look back on it now—that my pension was safe. We had seen the tragedy of Maxwell and what could happen to pensions, but I knew that the trustees of the British Rail pension scheme had done a good job in the past. I had faith in them and had no worries about the future. I was even more reassured in July last year when the Government said in their White Paper:
Privatisation will not affect pensions already being paid from or preserved in British Rail schemes.
I regard that as a guarantee and as a promise. It proved not to be a guarantee and, if it was a promise, that promise has not been kept.
I was not reassured for long. Before long I saw that the Government had two options. The Secretary of State still tries to portray those two options as a choice for pensioners and for deferred pensioners, like me. If they provide a choice, it is Hobson's choice. For me the choice

is between whether I should be burgled or mugged. It means, in effect, that my pension is going to be tampered with and reduced by the Government, without my say-so under either option.
Under the second option, it is clear that the Government will take my money. However, under the first option
an appropriate portion of each fund
will
be set aside as a closed scheme.
If an appropriate portion is to be set aside for a closed scheme, what will happen to the other portion? I hope that the Secretary of State will tell me what is to happen under the second option.
The first option means that the funds will be stripped and that there will be a change to a closed scheme. That scheme will die as the pensioners die. The scheme is terminal. It gives the Government the opportunity to evade and escape from the responsibilities that they had in the past. It provides no opportunity for shortfalls to be met by employee contributions.
The first option is unacceptable. The second option effectively allows the Government to take over all the assets of the pension fund. They promised me that my pension would rise in line with the retail prices index. But I already had that, and something else: I knew what my scheme was all about. I read the annual reports every year. It is no use Conservative Members shaking their heads. I know more about the British Rail pension scheme than any of them. I am a member of it.
The Government say that they will take all my assets and that in return my pension will rise in line with the RPI, but I already have over and above that in my present scheme. The trustees have looked after that scheme. Neither of the Government's options offers the same security or the same benefits as that scheme does.
Under the British Rail pension fund, pensions have increased by a third since 1984—not because of RPI increases, but through the use of surpluses. Widows' pensions have increased by even more—they now receive a half-payment rather than a third of a payment because of the surpluses created by good investment. The employer enjoyed a five-year contribution holiday thanks to surpluses in the fund. Other employees, but not me, had been enjoying a thirteen-and-a-half year half-payment contribution holiday which would not have ended until 2004, all because of the fund's surpluses. I was going to lose all those benefits under either of the Government's options.
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The fund is a living fund, and I use that word deliberately. It regenerates itself and keeps going because, as people die, new employees join, balance the fund and keep it balanced. For example, as at 31 March 1992, there were 295,478 people in the British Rail pension fund; 131,478 were contributing members; 40,000 were, like me, former members with preserved benefits; and 123,984 were beneficiaries. A balance was achieved between the new employees and people who were receiving benefits. The fund was stable not only in terms of numbers but financially. The accounts showed that the money coming in from employees was similar to that being paid to beneficiaries. The scheme worked and it was going to carry on working.
The figures for the same year show that 10,346 new members joined the scheme whereas 3,631 left. There were unfortunately 400 deaths in service and 4,022 retirements. The balance was set to continue and could have existed for ever if the Secretary of State had not interfered. He gives the impression that he is trying to be helpful to me and the pensioners, but I can only say, "Thanks but no thanks. I don't need it". I like the scheme as it is. I am happy and satisfied with it and I want to continue with the scheme that has given me such benefits.
The scheme provided me with as many guarantees as anyone can expect from any pension scheme or from anything else in life. There is no doubt that it worked well. Everyone agreed about that—the trustees, the Government, the unions, the pensioners arid the contributors. If it ain't broke, why has the Secretary of State got to fix it?
I have heard people say that the Secretary of State and the Minister for Public Transport have made changes and granted concessions as they went along. They have, and sometimes very rapidly. I am sure that the hon. Member for Eastleigh has sometimes been as confused as I am by the rapidity with which the Government have changed their mind. They began by saying that the new scheme would he "comparable". I am not sure what tht means, but the phrase was changed and it was said that any new scheme would be "no less favourable". Whether it is comparable or no less favourable will be a decision not for me as a deferred pensioner, for other pensioners or for the trustees, but for the Secretary of State. He is the same Secretary of State who has already told me that options 1 and 2 are comparable with the scheme that I already have. It ain't true. This is the same Secretary of State who offered me options 1 and 2 after telling me initially that privatisation
will not affect pensions already being paid from or preserved in British Rail schemes.
With respect, would I not be a little more naive than the hon. Member for Eastleigh if I were now to accept that my future and that of the other 200,000 people involved was to be left to the Secretary of State's interpretation of the phrases "comparable" and "no less favourable" when, only a few minutes ago, he was telling us that it was very difficult to describe what "precisely" meant? If he cannot tell us what "precisely" means in law, it will be very difficult for him to tell us what "comparable" and "no less favourable" mean in law. People have been caught by such phrases before.
My hon. Friend the Member for Kingston upon Hull, East referred to previous BR privatisations when employees were told that their pensions would be mirror images of British Rail pensions. Were they mirror images? There was not a single scheme in which the contributors or pensioners did not lose out as a result of the change to the "mirror image" pension schemes. If I am wrong—I do not think that I am because it is a matter of record—or if the Secretary of State can tell me of one BR privatisation scheme which worked out better for pensioners and contributors, or one which worked out just as well, I should be very happy to hear about it. However, I have investigated them all and I could not find one.
I ask the Secretary of State what is wrong with continuing with a truly open scheme, not one that is open only at present? I noted that in Committee the Minister referred to the proposals as an open fund for the present, but the Secretary of State now refers to them as a closed

fund in due course. It may be a question of semantics, but the delay is leading to a closed fund which, in the end, will be worse for me and for the present pensioners. The closed fund will be introduced not at my request or that of the trustees, but at that of the Secretary of State.
What is wrong with asking new employees to make a choice? What is wrong with asking them whether they want to contribute to a joint industry fund which is open to all, to take out a private pension or to join the pension scheme offered by the new operators? What is wrong with offering people that choice? Anyone with any sense will want to stay with the joint industry scheme which is open and is—I use the word again—a living scheme that will not disappear.
If the Secretary of State thinks that the delay is a sop or that it will persuade me that he is doing something for me, he is wrong. Pensions work on a long-term basis. I disagree with my hon. Friend the Member for Kingston upon Hull, East because I do not think that the new scheme will be introduced in 1994. I believe that it will be introduced later, but does it matter if it is introduced in one, two or three years? Does it help me if it is introduced in five or 10 years? The answer is no. I shall not be drawing my pension for 20 years, but 20 years matter because by then the Secretary of State will have made his changes and will have made my pension a closed scheme. By virtue of its being a closed scheme, the trustees will not have the leeway to invest wisely to ensure that I receive proper benefits.
I refuse to be grateful for the Secretary of State's concessions because none of them is a proposal that in any way matches or even comes close to what I have now. At the moment, I have a pension scheme with which I feel safe and secure—a pension scheme which means that I can sleep at night without worrying that it will disappear. The Secretary of State seems to be proposing something that will not allow me to sleep at night and, more importantly, will not allow hundreds of thousands of other people to sleep at night. I have an edge on all those people because I have a House of Commons pension. What an outcry and what a Back-Bench revolt there would be if the proposals for the railway pension scheme applied to the House of Commons pension scheme. How would Conservative Members react then? If they feel passionately—as I hope they do—that people should be protected, they should put themselves in the position of those hundreds of thousands of railway employees.

Ms Jean Corston: Does my hon. Friend share my concern about what will happen to the surplus in the pension fund? Little has been said about the surplus. As I understand it, in law the surplus in any pension fund is the property of the employer. In this case the surpluses—

Mr. Bowen Wells: indicated dissent.

Ms Corston: Conservative Members shake their heads. I have had the point clarified in Committee on another matter. The surplus in the railway pension fund is owned by the Government. Does my hon. Friend agree that we need assurances from the Secretary of State that the Government do not intend to do anything with the surplus in the fund, other than to disburse it for employees and pensioners?

Mr. Heppell: I agree with my hon. Friend. There is a need for further reassurances. We get reassurances about the present, but not about the future. I do not wish deliberately to draw comparisons between Maxwell and what is happening now. However, although it may be legal for the Government to take my pension, I do not think that it is moral. In the Maxwell case, it was neither legal nor moral.
The problem is that, although I accept the assurances of the Secretary of State that I should not worry because the Government are not taking my pension now, I still have grave concerns and doubts about whether the Secretary of State plans to take my pension in the future. I am not willing to accept guarantees that are given to me in the form of words such as "comparable" or "no less favourable". I want something written into legislation that protects me now.
My hon. Friend the Member for Kingston upon Hull, East was quite right. We were told in Committee not to worry because something would be provided on Report to reassure us. We are now being told that there will be an order in the future to reassure us. It has already been stated that we shall be able to debate the order, but that we shall not be able to amend it. The Whips will be on. When that happens, there will be an hour and a half's debate and, although the hon. Member for Eastleigh may be outraged by the Government's betrayal, the vote will go through. We all know how things work in Parliament. I am not prepared to be grateful for any concession. Why should I be grateful for someone throwing me crumbs when they have stolen my loaf'? Someone is stealing something that belongs to me; it may be legal, but it is not moral.
How will the two-tier system created by the Secretary of State affect the work force? All new employees will be expected to take a new and, I suspect, substandard, second-rate pension scheme instead of the one currently on offer. In future, people will be worse off and I want to fight that. I want not only to look after myself and the present pensioners, but to ensure that the people who come after us will have a decent pension scheme. People have the right to expect a decent pension scheme. Why should we have legislation that worsens the scheme?
What about the existing employees? We shall create two types of employees: the employees who have low pension costs and those who have high pension costs. The House should mark my words. It will not be long before the private operators and the unscrupulous realise that it is cheaper to employ people on the new pension schemes. People who presently work for the railways will be shed because they will be more expensive. That will happen, just as full-time jobs are being lost across the country to make way for part-time jobs in which the beneifts are not so good for the employees, but in which the costs to the employers are less. By fair means or foul, new employers will recognise the savings and will make the changes.
5.45 pm
We asked for guarantees on a number of issues in Committee. The Minister said many times that he could not give guarantees that would apply for ever and that nothing was certain in life. I accept that on many issues; I accept that there will be change, whether we like it or not. Changes are often for the good, so we should not resist just for the sake of resisting change. However, there is one matter about which people—I am certainly one of them —expect to have some certainty: their pensions. They

expect to have guarantees about their pensions and they expect to have some guarantees about their future. They are not prepared to leave their pension to chance and they are not prepared to gamble with it. Yet that is what the Secretary of State wants me to do now. He wants me to gamble with my pension, but I am not prepared to see my pension go without protest. I know that there are hundreds of thousands of people who feel the same and they will continue to protest if the Government push the proposal through.

Mr. Milligan: indicated assent.

Mr. Heppell: The hon. Member for Eastleigh nods; he knows some of the pensioners and he knows how strongly they feel on the issue.
This debate is not just about my pension, nor is it just about railwaymen's pensions. It is about everyone's pension. It is about miners' pensions, about the Post Office pensions and about all the public sector pensions. It is also about the state pension. Let us not—

Mr. Deputy Speaker (Mr. Michael Morris): Order. The debate cannot be about state pensions. It must be about the new clause.

Mr. Heppell: Thank you, Mr. Deputy Speaker. I realise that I was straying from the point.
The new clause makes it clear that there is a need for consultation with the trustees. I wish that the Government would consult people more widely on every issue. The Government are in economic crisis. Part of the reason for the changes in pension plans is that the Government would like to take some money out of the pension fund. Members of the other place have told us that state pensions are under threat. That is not something to be laughed at or scoffed at. As a result of the pressures on the Government, there are all sorts of strange decisions. There is the threat of prescription charges for the old and the young. There is the threat of the closure of post offices and pharmacies.

Dame Elaine Kellett-Bowman: That is not true. Post offices are not under threat—not that we are discussing them at the moment.

Mr. Deputy Speaker: Order. The hon. Gentleman's speech has been entirely in order, but he is now straying. Would he please return to the new clause and to the new clauses and amendments associated with it?

Mr. Heppell: Thank you, Mr. Deputy Speaker. I will return to the new clause. I was trying to point out that everything was up for grabs and that people accepted that fact. Pensions are one of the things that are up for grabs. I believe that there is a threat to state pensions as well as to occupational pensions.
I realise that I am trying your patience, Mr. Deputy Speaker. However, I cannot accept the Secretary of State's promises. We have heard those promises before and we have seen them broken. I believe that the promises on pensions in respect of the new clauses will be the new broken promises of this Government. I hope that hon. Members will support new clauses 3 and 29 and I hope that they will do all that they can to ensure that the pensions belong to the pensioners and not to the Government.

Dr. Marek: I spent no longer than 30 seconds moving new clause 3 and that produced a most surprising result from the Secretary of State. After 10 years in Parliament,


I did not expect him to say that he accepted the spirit of my new clause and that he would table amendments in another place. I thank the Secretary of State for that. That is a small but welcome step and I believe that it will be appreciated by every railway pensioner.
I speak as a sponsored member of the National Union of Rail, Maritime and Transport Workers. However, unlike my hon. Friend the Member for Nottingham, East (Mr. Heppell), I do not have a railway pension. I appreciate my hon. Friend's feelings when he said that he felt happy with his pension at the moment, but he was worried about the future. He is worried about the Government getting their sticky fingers on his pension fund. That is the root of the problem. If the Government are able to get their sticky fingers on the railway industry's pension fund, they may be encouraged by their success and try to get their sticky fingers on pension funds elsewhere.
Having gained success by being brief earlier, I suppose that I must not be other than brief now. I agree with the Secretary of State that the provisions in new clause 3 would have been better in schedule 10. However, in line with the procedures of this place, I thought that it was right to table the new clause in the first instance.
I obviously failed in my drafting when I included the words "Board pension scheme." Perhaps I should have spotted that, but all is not lost. I included "precisely" in the new clause intentionally. It is perhaps a comment on our law, and the way in which lawyers earn their money, that we cannot include "precisely." Life being as it is, it is likely that "precisely" will have to be dropped from the eventual wording. However, I hope that the Secretary of State can find a form of words that will be as close to "precisely" without encouraging lawyers to make a lot of extra money by challenging a particular decision in the courts.
I want to refer to the representations and responses of the British Railways Board. A BRB response to "Railway Pensions After Privatisation," under a paragraph entitled "Safeguards in the Railways Bill," states:
The Board considers that, for the further protection of the security of members' interests, the Railways Bill should include the following provisions:
1. Any regulations under the Act must not enable any decision about the use of funds to be made other than with the agreement of the Trustees.
Hon. Members who served on the Standing Committee will recall that I tabled an amendment to that effect which did not find favour with the Committee. However, it is a central issue in this debate. The Secretary of State should be able to make changes with regard to the use of funds only with the consent of the trustees.
In the response to which I have referred, BRB makes two other points:
2. Any Joint Industry scheme should offer benefits no less favourable than the present schemes.
3. Transfer payments should reflect a fair division, as agreed by independent actuaries, of the existing funds between beneficiaries.
I recently received a briefing note from British Rail that amplified those points. It stated that BR staff should be able
to remain permanently in the proposed joint industry scheme, if they wish".
It stated that existing BR schemes should
remain open for BR staff and pensioners as long as feasible.
It also stated that
the agreement of their trustees"—
must—
be required to changes to those schemes.

The Government have gone some way down that road in relation to the Secretary of State's written answer which gives commitments. I hope that those commitments are genuine, in the spirit that there should be a guarantee for BR staff to remain permanently in a proposed joint industry scheme and that any future benefits should not be less favourable. If that is the case, we have moved a little. However, it is a great pity that we have not been able to get the Government to accept that no changes should be made without the agreement of the trustees. Unless the Government can accept that, I am extremely worried about what the Government will do.
The Secretary of State for Transport is being honest and I believe him. However, he is not master in his own house with regard to the sum total of Government finances. The Treasury may well have different priorities and it may wish to change the uses to which some of the money can be put in years to come.
We have moved some way in that option 2 has been withdrawn and we have moved to option 1, although that is imperfect. As my hon. Friend the Member for Nottingham, East put it very well, if it is a good scheme, why change it? There is no obvious reason why we are changing it, save, perhaps, for the position of new entrants.
I am sure that new entrants will not be able to join such a scheme. They will not be able to benefit from improvements to such a scheme or have the lifestyle that existing pensioners will have as a result of their participation in the present scheme. This debate is about the impoverishment of the people of this country. People will be poorer as a result of the changes that the Government have announced.
I believe that new clause 3 is valuable because it will clarify what the Government are doing. I hope that the Government will accept my new clause because if Transport Ministers want to do the best for the pensioners, they should be happy to demonstrate publicly and to the House that any changes will not adversely affect pensioners. I doubt whether that will be the case when the Treasury gets going on this matter in years to come. However, I will be charitable to the Secretary of State for Transport and say that I believe that that is what he hopes to do.
As to new entrants, we need simply consider what happened in earlier privatisations. Without exception, all the pension schemes in the National Freight Corporation. Sealink, British Rail Engineering Ltd. and Travellers Fare Ltd. now offer inferior benefits. Despite reductions in the membership contributing to large scheme surpluses, the National Freight Corporation, Sealink and BREL have all enjoyed, and continue to enjoy, a pensions contribution holiday. Unfortunately, the schemes' members have not been treated as generously. In addition, the National Freight Corporation and Travellers Fare Ltd. have established new schemes offering inferior benefits which, at the same time, provide the companies with greater control of scheme assets than did the initial schemes established on privatisation. We will have to examine the results of the Goode report, but if the history of privatisation is anything to go by, the more security we can establish, and the more we can tie the Government down in the operation of the new scheme in respect of any changes that will be introduced, the better. I am convinced that as a result of the measure that we are debating today, new entrants will be impoverished in their pensionable years.
I thank the Government for accepting the spirit of new clause 3. I look forward to the amendments being tabled in another place. Every British Rail pensioner will be happy that the Government have accepted the change suggested in new clause 3. They will know what changes will be made. Most important, they will know when the Government propose to do something other than what the trustees would wish. I only wish that the Government were prepared not to make any changes except with the agreement of the trustees. This is the next best thing. In view of what the Secretary of State for Transport said earlier, I certainly shall not press the new clause to a Division.

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Mr. Milligan: I should like to reply to some of the points that the hon. Member for Nottingham, East (Mr. Heppell) raised in a passionate, sincere and deeply felt speech which I am sure that the House respected. I hope that I can say a few things that will enable him and 200,000 other pensioners to sleep well at night. Before I do so, I wish to add a few words to the tributes paid by both Front-Bench spokesmen to the late Robert Adley.
As a new Member, I particularly appreciated Robert Adley's generosity and kindness. He showed it to me in a particular way when I had an Adjournment debate on the future of the rail maintenance works in my constituency in which he had hoped to speak. Shortly before the debate, he came to me and said that he would withdraw his name because he realised that as a critic of the Government his support might be counterproductive.
It was typical of Robert Adley's generosity that he put other people and, indeed, the railways before his self-interest. I remember him as not only a critic of the Government on rail privatisation but a strong supporter of the Government on the Maastricht treaty. He was a positive European and a strong European. He argued convincingly in the House for the European cause. We shall miss him greatly.
As hon. Members who served on the Standing Committee will know, the pensions issue is of great concern in my constituency, where there are almost 2,000 railway pensioners. As other hon. Members have said, the issues give rise to wider concern. People on railway pensions receive a modest pension—typically, £40 a week. That is not a large sum. As the hon. Member for Nottingham, East made clear, such people usually have not earned a great deal of money in their lifetime, but they have done extremely well out of a pension scheme which has been well run and well managed. In the past six or seven years, for a typical person, the amount has risen by a third above inflation.
The hon. Member for Nottingham, East asked how Members of Parliament would feel if we were discussing changes to the House of Commons pension scheme. The British Rail pension scheme has probably done rather better than the House of Commons pension scheme. We would all be rather well off if our pensions were run by the British Rail pension board.

Mr. Heppell: The average pension of a pensioner in the British Rail pension scheme is about £30, so there is a difference between the schemes in the amounts that individuals receive.

Mr. Milligan: I am grateful to the hon. Gentleman for making that point. But he will agree that the percentage increase has been impressive.
The issue that we are discussing this afternoon is not whether but how pensioners should be protected from any adverse effects of privatisation. From the outset, the Government have made it clear that railway pensioners will receive no less favourable treatment than they would have done if the scheme had continued in the same way.
Opposition Members have asked why the existing scheme cannot continue. In Committee, my hon. Friend the Minister for Public Transport explained at great length why, for tax reasons and because of Inland Revenue rules, that was not possible. He also made it clear that he was determined to ensure that pensioners were protected. The Government have been criticised for changing their policy. The hon. Member for Kingston upon Hull, East (Mr. Prescott) has made some capital out of such criticism. It is characteristic of the discussions on the Bill that the Government have listened. They have consulted. They listened to the trade unions and accepted the unions' view that a joint industry scheme would be good.
The Government listened to the trustees. They listened to British Rail. Only today they listened to the hon. Member for Wrexham (Dr. Marek). My right hon. Friend the Secretary of State accepted the spirit of the hon. Gentleman's new clause. Even more remarkably, the Government have listened to Conservative Back Benchers. The Government should not be criticised for taking account of the objections that have been made. They should be congratulated on having widely consulted, listened and taken account of what people have said.
The Government have taken account in particular of what the pensioners have said. As the House knows, the Government originally provided two options. Under one option, which was much criticised, the money would have been transferred to the Treasury. Pensioners would have had an inflation guarantee. There were some attractions to that option because, contrary to what is widely said, the present scheme is not index linked.
However, the pensioners, certainly in my constituency, made it clear that they did not want that option. They preferred to have a scheme as close as possible to the existing scheme. That is why I suggested in Committee what I knew was the view of the trustees. I asked whether it would not be better to put pensioners, existing employees and those who remain with British Rail in the same scheme. That would get around one of the problems of the Government's original plan.
As the hon. Member for Kingston upon Hull, East made clear, a closed scheme including pensioners only would have to invest more in gilt-edged stock because the scheme would not have a continuing flow of contributions from people who were still working in the industry. The suggestion was that the two should be combined in a transitional scheme. That is exactly what the Government have announced. Having talked to pension trustees last week and this week, I know that they are delighted with that announcement. It goes a long way towards meeting the concerns that have been expressed.
The hon. Member for Nottingham, East asked how "no less favourable treatment" could be defined precisely. That is difficult to do. We are not asking for a guarantee that railway pensioners will receive the same increases that they have received in the past seven or eight years. That is not possible. We do not know what the performance of the


underlying investments will be. However, we want a guarantee that they will have the same prospects and opportunity of benefiting from efficient management of the pension fund. The scheme that has been announced today gives them that guarantee, and it is encouraging that the trustees have welcomed it.
On behalf of the trustees, I should like to ask my right hon. Friend the Secretary of State to emphasise that the guarantee of "no less favourable treatment" will continue to apply even when the scheme becomes a closed scheme, if that is the case. That is important.
I congratulate the Government on accepting the changes. The changes have satisfied the trustees and pensioners will recognise that the Government have met their concerns. I understand why the Opposition have attacked and criticised the Government. That is their job. They do not always do it effectively, but sometimes they do. However, they must accept yes for an answer. The Government have accepted the points that they have made. To continue to make capital from the now rejected scheme of transfer to the Treasury by using words such as robbery, theft, burglary and mugging goes beyond the bounds of decent argument. The Opposition are trying to exploit the concerns of people who are vulnerable. They have failed to recognise the Government's announcement. That is disgusting, and I hope that the hon. Member for Kingston upon Hull, East will have the grace and decency to withdraw his allegations at the end of the debate. The Government have my full support.

Ms Glenda Jackson: In common with my hon. Friend the Member for Nottingham, East (Mr. Heppell), I wish to declare an interest, in that I am sponsored by a rail union, the Associated Society of Locomotive Engineers and Firemen.
The concerns expressed by the hon. Member for Eastleigh (Mr. Milligan) were also expressed in the petition that my hon. Friend the Member for Nottingham, East presented to the House on Friday morning. The thousands upon thousands of signatures of British Rail pensioners were not created by the Opposition. They were the genuine and still real concerns of BR pensioners. The accusation that the Government were attempting to steal from the BR pension fund began, if memory serves me correctly, in economic newspapers. People may not have gone all the way and called it theft, but there were reports that the Government were attempting to get their hands on the BR pension fund. The newspapers raised the issue that if the Government got away with the BR pension fund, they would then attack the coal fund and the Post Office fund. The Opposition are always accused of scaremonger-ing—[Interruption]. "Hear, hear," say Conservative Members. Nine times out of 10, those scares come well and truly home to roost.
How can any pensioner have real trust in a Government who have suggested, in the European Year of the Elderly, that pensioners may have to pay prescription charges? The Government promise to impose VAT on fuel, which, as we all know, affects pensioners deleteriously.

Mr. Deputy Speaker: Order. The hon. Lady must have heard what I said to the hon. Member for Nottingham, East (Mr. Heppell). She must address her remarks to the new clause and the amendments grouped with it, and not be tempted to range more widely.

Ms Jackson: Thank you, Mr. Deputy Speaker. I was taught always to give in to temptation, but I shall restrain myself on this occasion.
Changes have already been made to the Government's proposals for a pension scheme. To my certain knowledge, they have taken three bites at the cherry, and have cracked their molars every time. They have had to come back with an alternative scheme; but that scheme has not stemmed the fears of British Rail pensioners—or, indeed, those of current employees. The idea that all employees will be allowed to enter the joint industry scheme is welcome, but why is there not the concomitant that all new employers must also participate in the scheme? As was pointed out in Committee, it is entirely possible that a new franchisee, or an open-access employer, will find it economically unviable. We will be creating a two-tier system.

Mr. Milligan: The hon. Lady seems to misunderstand the joint industry scheme. Employers will be obliged to take part in it.

Ms Jackson: I am not surprised to learn that I lack understanding in that regard. I understood very clearly when my hon. Friend the Member for Nottingham, East described the pension scheme as it now exists; I am sure that the Secretary of State will take that as a valuable lesson when he wishes to define the Government's scheme in more detail.
My understanding is that new employers will not be forced, or obliged, to enter the scheme if they can offer their employees what they call a better scheme. But, as we have heard, the current employees do not want any change in the existing pension scheme. If such a change is to be made, they want a fail-safe guarantee that no alterations may be introduced without the full and tacit agreement of the trustees. Surely every hon. Member should want to guarantee that safeguard for BR pensioners.
As my hon. Friend the Member for Nottingham, East pointed out, the actual pensions are extremely small. Employees of British Rail, as it still is, have given more than financial contributions to the scheme. As was said in Committee—I must emphasise this—this is a high-risk industry, not for the travelling public, but certainly for those employed on the railways. There has been a marked increase in the number of injuries and, in some instances, deaths. We are being asked, in a sense, to penalise people who have not only given their work and their money to the pension scheme, but—in a number of cases—given their lives to the industry.
The complexities and difficulties that the Government are experiencing are entirely their own fault. It was the Government who decided to privatise British Rail, not the BR board or the employees. The Government's problems are entirely of their own making. Surely it is up to the Government to listen to those who know best the realities of the industry, and the realities of having to live on small pensions.
In a letter dated 19 May, Mr. R. S. Green, chairman of the Southend and district branch of the British Transport Pensioners Federation, wrote:
Mr. MacGregor offers us nothing we do not already have —but he is taking something away … Mr. Freeman repeats that BR's pension fund will only be used to provide for pensions. I believe him. But this is not the same as saying that we will get our full and fair share. By limiting payment under Option 2 to the already existing 'pension plus RPI' level he is simply providing more for others (which could include


Franchisees). By removing the chance for us to share in any possible future surplus he robs us of the hope of a better future and alienates pensioners.
Earlier in his letter, Mr. Green wrote:
Just this past week you will have read that the BT pension fund has been revalued and shows a large downturn in income. Their entire surplus has been wiped out and the employer's 'contributions holiday' has been terminated. They are now resuming payments into their fund … If a huge fund with a surplus can be reduced to deficit in a year what hope would there be for a fund deprived of both employer and employee contributions? But this"—
so a BR pensioner believes—
is the essence of the Government's proposal.
We have all made our points to the Government, both today and in Committee. The Minister has said that the Government are willing to listen. I urge him to continue to listen and to give pensioners the necessary safeguard—certainly in regard to the trustees' decision—if any change in pension schemes is considered. We owe it not only to BR pensioners and employees, but to the millions of citizens who—as my hon. Friend the Member for Nottingham, East said earlier—are concerned about their pensions, whether or not they are connected with BR. I believe that that should be part and parcel of decisions made in the House. Not only should the fine detail of Government proposals be examined, but an attempt should be made, as far as is humanly possible, to give a wider perspective to issues about which the public are genuinely concerned— issues that relate to their future.

Mr. Gyles Brandreth: Let me take up what the hon. Member for Hampstead and Highgate (Ms. Jackson) has just said. It is clear that the Government have indeed been listening.
I welcome this afternoon's statement by my right hon. Friend the Secretary of State. It is evident that consultation has been wide and effective, taking on board points as wide-ranging as those raised by the Cicero of Eastleigh and the McGonagall of Wrexham. I am particularly grateful to my right hon. Friend for taking up the points that I have raised on behalf of the Chester branch of the British Transport Pensioners Federation. Its concern was, first and foremost, to ensure the preservation of the security of rights enjoyed by pensioners.
The federation will welcome the joint industry pension scheme, the fact that existing employees' rights will be protected by statutory orders and the fact that the benefits offered to employees will be no less favourable than those in the existing scheme. They will welcome the fact that there will be no penalties for involuntary breaks in employment—that the present scheme, under which the employer matches additional voluntary contributions made by employees, will continue; in short, that there will be no mucking about with BRASS.
The federation will particularly welcome the written reply in which, on Thursday, the Secretary of State went further, and gave staff serving at the time of Royal Assent the individual right to remain in the joint industry scheme for as long as they were employed in the railway industry. As has been explained, the amendment to the Bill that will secure what I believe is termed an indefeasible right will be presented in another place. In particular, the federation

will welcome the specific safeguards in franchise contracts to cover the transfer of pension funds when a franchise changes hands.
Mr. Bill Newman and his colleagues in the Chester branch of the federation—to whom I have spoken again today—are reasonable people. They are looking for helpful reason, rather alarmist rhetoric; yet they have been alarmed by unnecessary scaremongering, which has gone on for weeks and has been perpetuated today by a positive Niagara of words from the hon. Member for Kingston upon Hull, East (Mr. Prescott)—a Niagara thick with the flotsam and jetsam of scare, smear and half-truth. What they wanted, and what they received, was the cool stream of reason and the solid, tangible reassurance provided by the Secretary of State.

Mr. John Denham: It is significant that we have had clarification of the Government's intentions for pensions so late in the day. It reflects an underlying attitude that has been clear ever since the privatisation proposals were first introduced—that the least of the Government's concerns has been the welfare of those who ensure that the railway system operates. I know that it is sometimes unfashionable—even, for Conservative Members, an insult—to talk about producer interests. I believe that those who provide our railway services, and those who have done so in the past, deserve to be given as high a priority as any other group. The lack of that consideration explains why the pension proposals have been introduced so late. It also explains why we are still being asked to rely on promises rather than written guarantees.
Throughout the debate of recent months pensioners have been treated as a problem, not as people to be respected for their contribution. It has not been said often enough by Conservative Members that the reason for the problem with past and future pensioners is privatisation itself. Everything that we hear from the Government starts with the assumption that the railways will be privatised, then the problems caused for pensioners will be considered. There would be no problem about the future of the pensions of those who work in the railway system and have given their lives to it were it not for the Government's intention to privatise it. That is the gulf that divides the two sides of the House on so many occasions. The Government ask us to assume that privatisation is a good thing, so the House should concentrate on dealing with the problems for pensioners that will follow from it. The Opposition are inclined to say that there would be no problem if the Government had not started on the madcap policy.
Privatisation brings two problems for pensioners. The first is the interpretation of the Inland Revenue rules, and how the contributions of non-associated employees should be handled. I am not convinced that the Government could not have found a way round that problem had they the political will to do so. It has been convenient for the Government to hide behind the Inland Revenue rules to push forward with their wider objectives.
The second problem caused by the proposed privatisation is the unwillingness to require employers in the private sector railway system to bring their new employees into a pension scheme on the same basis as existing employees have been brought into the Government scheme. It is, above all, the determination to lower employer costs for new employees of the railway


system that lies behind the rest of the problems, threats and uncertainties that hang over existing British Rail pensioners and those who will become pensioners in the next few years. That is wrong—it is wrong to try to provide this country's railway system on the basis of driving down the conditions of those who will provide railway services in future.
In Committee I described the Government's preoccupations as ideological dogma. The Minister for Public Transport said that it was not ideological dogma, but a statement of principle. We can choose the words that we want to use to describe that attitude, but it comes clown to one of political belief rather than a rational approach to running the railway system.
Without privatisation there would be no such problems. Have the Government done what they are now trying to say that they have done for pensioners? Have they found a way of securely cutting through the problems caused by privatisation to guarantee the pension rights of current and future pensioners? I have to say to the hon. Member for Eastleigh (Mr. Milligan)—who has taken much time and trouble over the matter—that I do not believe that the answer to that question is yes.
If we compare the rights currently available to British Rail pensioners and employees with those that will exist in future we see a number of critical weaknesses that the Government's proposals do not overcome. The pensioners have clearly had a number of concerns. Their bottom line concern involves the security of their assets—the fear of somebody "doing a Maxwell". The Government fuelled that fear themselves by their infamous option 2 proposal to nick the money and stick it in the Treasury. There is nobody but the Government to blame for the fears that pensioners expressed about that option. We are told that that option has now been rejected, although I have not heard the absolute assurance that it has been rejected for the future which many of us would like to have heard. The idea of taking money in the short term appears to have come off the agenda.
Pensioners have expressed a second worry. They want to be able to compare what they will receive under the Government's proposals with what they currently receive under an industry-wide scheme, in which all those who provide rail services share and in which the costs and future risks are shared between the current pensioners, current employees and future pensioners. When one compares what pensioners receive at present with what the Government propose for the future, one highlights the reason why the Government have not managed to tackle the problem properly.
Once a fund becomes closed, it has to adopt a more conservative investment strategy. It will not be possible for pensioners in a closed fund to enjoy the sort of returns on assets that the British Rail pension fund has previously produced. The original proposal was to close the fund immediately; the current proosal is to close the fund in a few years' time. The fundamental proposal to close the fund has not varied.
We hope that all current British Rail pensioners and those who become pensioners in the next year or so will wish to draw their pensions for much longer than t he five or six years that the fund may remain open. I hope that many of them will draw their pensions for 20, 30 years or more. For most of the period that those pensioners draw

their pensions they will be drawing on the assets of a closed, not open, fund. The fund will not benefit from an inflow of money from new contributors.
As I understand it, it is likely that all the funds will be managed as one pool by the British Rail pension fund, but the different claims on that fund will buy into or be allocated certain parts of it. A central pool of funds will purchase equities, gilts or property. However, assets will be apportioned differently depending on whether someone belongs to the closed fund of pensioners or to the relatively active fund of a new employer. The pensioners in the closed fund will receive the most conservative portion of the assets.
In practice, that means that someone who is now retired will find that, within a few years, he or she will he in a closed fund that pursues a conservative investment strategy and gives a conservative rate of return. A member of British Rail staff who transfers to a franchise organisation in the next year or so will be in a different part of the fund which has very few pensioners. Someone of 63 or 64 who transfers to a new franchise will be one of the first pensioners in that part of the fund, whereas a person who is now 66 and retired will be one of the last pensioners to join the closed fund.
On the advice that I have been given, my understanding is that the performance of those two funds will be different. An employee who is two years older than another employee in another part of the railway system will receive a different return on his or her pension. A British Rail pensioner will receive a lower rate of return in future than someone in a more advantageous part of the system.
Therefore, the Government's scheme fails for two clear reasons. The first reason is that the scheme that is now being proposed is less favourable than the current scheme because it forces the closure of the fund in the foreseeable future. The second reason is that that fund is likely to prove less favourable than the fund used by other people working within the railway system. In both cases pensioners will say that they are worse off than they would have been had the system remained unchanged. They are even likely to say that they will be worse off than someone who retired only a couple of years before them because of the way that the scheme is structured.
6.30 pm
The third reason relates to security. It is possible that the closed fund could be worse even than index linking, which was in option 2. Everyone accepts that there is no guarantee even of index linking in the current pension system. Pensioners rejected the index-linking option because they perceived it as likely to be worse than what they get under the current British Rail system. It is still a fear of the pension fund trustees that it is possible that, once the fund is closed, it may not only work less favourably than other parts of the railway system; it might not be able to meet the demand of index linking. As far as I can tell, the Government have given no guarantee that even that basic index linking would be met under this option. They will say that they have given pensioners the choice by going out and consulting. However, the pensioners did not like option 2.
The Government have increased the risks to pensioners of staying in an investment fund by the way in which they have chosen to do it. They have told pensioners that they can have a fund that may give them a return on their assets but the risk is much higher. It is unacceptable to give


pensioners the choice of maintaining the rate of return that they have seen recently, perhaps losing it altogether, or accepting the index linked Treasury option.
The hon. Member for Eastleigh said that he wanted the Minister to give a guarantee that, if the fund is unable to meet at least index linking, it will in some way be topped up by the Government. The Government should also give a guarantee that, if the closed fund performs less satisfactorily than other parts of the British Rail pension fund, they will bring its performance up to that of the more favourable parts of the fund. After all, it is the Government's action of pursuing privatisation that has created the risk of either of those two things not happening.
The only way in which they can give a guarantee to pensioners is to make it clear that they will top up the closed fund if its performance does not come up to that of the more favourable parts of the fund. I hope that the Minister will give that assurance. If not, I hope that not only Labour Members but the hon. Member for Eastleigh, who has made great play of protecting the interests of pensioners, will not vote with the Government on this crucial clause.

Mr. Hugh Bayley: At the outset, I remind the House that I am sponsored by the National Union of Rail, Maritime and Transport Workers. In my brief time as a Member of Parliament, I have had a larger postbag on rail privatisation than on any other issue. Since the Bill was published, I have received more than 400 letters from my constituents.
Not one of those letters supported the Government's proposals for privatisation, despite the fact that a number of those who wrote described themselves as lifelong Tory voters. The vast majority of the 400 letters came from rail pensioners living in my constituency, expressing their disbelief and outrage at the Government's proposals for the pension fund.
The Secretary of State accused my hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott) of scaremongering. But that statement of the Secretary of State will simply be met by stunned disbelief by the rail pensioners in my constituency and elsewhere. He is looking for a scapegoat—he is prepared to blame anyone but himself. I remind him of what he said in the House in January during the debate on rail privatisation. About the pension fund, he said:
we propose one of two options. The first is that an appropriate part of the existing fund should be set aside and administered separately for the pensioners … Alternatively, part of a fund could be taken over by the Government who would undertake to pay index-linked pensions."—[Official Report, 12 January 1993; Vol. 216, c. 795.]

Mr. MacGregor: As I made clear earlier, if we had gone for that option, if that was what the people had wanted, it was accepted by the pension trustees that, if the Government were making commitments to liabilities of that sort, it was reasonable that a part of the total assets should be handed to the Government in response to giving those liabilities.
All the liabilities related to pensions, and would have been independently and actuarily calculated. We could not give an absolutely clear actuarial commitment, given that there was an open-ended Government guarantee, but it would have been as near as one could get. It would have been absolutely fair, and done entirely for pension reasons.

Mr. Bayley: It was in the plans, but the Government were blown off course—they had to drop the idea.

Mr. MacGregor: Is the hon. Gentleman saying that, if that option had been chosen, the Government should then be responsible for paying all pensions and giving a guaranteed index-linked pension, but should not have any assets to pay those pensions, so the assets in the pension fund should have remained in toto for the benefit of existing employees? If that is what he is saying, the Public Accounts Committee would have made a devastating comment on that proposal.

Mr. Bayley: The Secretary of State knows perfectly well that that is not what I am saying. Labour Members have never argued for that option, but the Government have. If pensioners were scared—indeed, they have been scared by the Government's proposals—it was the words of the Secretary of State that scared them, not the words of Labour Members.
To make it absolutely clear to my constituents what the Government were proposing, I lodged in every public library in my constituency a copy of the White Paper, and a copy of each of the Department of Transport consultation documents, including the one on pensions, and a copy of the Bill. My constituents were able to read what the Government proposed and draw their own conclusions. I wish that all Conservative Members in railway constituencies had been as open and free with information to their constituents as I was with mine. Perhaps they would have received 400 letters if they had done the same.
Pensioners were scared by what they heard from the Government. It was not Labour Members who were—as the Secretary of State looks at it—whipping up fear among pensioners. An article in the Financial Times on 15 March said:
The result
of the Government's proposals for rail pensioners
is that a chastened government is preparing to beat a rapid retreat in the face of pensioner power.
The Government's proposals created the reaction from pensioners.
The article goes on:
The second option would, in effect, involve the nationalisation of the pensioners' money … the government would be taking on a commitment to pay pensions in exchange for acquiring the scheme's assets, the Treasury would then have to dispose of £8·5 billion of mainly equity-type investments. This would be helpful in funding a soaring public-sector borrowing requirement since it would take pressure off the gilt market.
Those are not the words of Labour Members—they are the independent words of a journalist writing in the Financial Times.
It is a cheek for the Government to accuse the Labour party of scaremongering when they have only themselves to blame. Because of the pensioners' protests, they were forced to withdraw option 2—the "nationalisation of pensioners' money" option, to use the words of the Financial Times.
What about option 1? Mr. Robertson, the chairman of the British Rail pension scheme, wrote in a letter to the Standing Committee examining the Bill that option 1 "undermines the pensioners' security". I recognise that the Government have been forced to not only withdraw option 2 but make a number of significant amendments to option I. For example, in their consultation paper, the


Government considered tearing up the agreements that they had made under the terms of the 1980 Act, but those have been reinstated.
The BRASS obligations have been confirmed, and the Government have been forced part of the way down the road to a single, industrywide pension fund. They have agreed to what they call an industrywide fund that will consist of existing pensioners, former employees of BR who remain within the rail industry and continuing BR employees.
I suspect that there will be much dispute over the definition of a former employee who remains in the rail industry. Some employees will transfer from BR to a private company operating a rail franchise. There will be no doubt that such people still work in the rail industry, and, under the Government's proposal, if they were former BR employees, they will take with them their pension rights.
Many people in my constituency work as professional engineers designing signalling systems and permanent way installations and designing and repairing bridges. Under the Government's privatisation proposals, many of those people could transfer to firms of consulting, civil, electrical, or mechanical engineers.
Those firms would certainly be working on some railway projects: that is why they raided British Rail for the required skills. However, they would also work on other civil, mechanical, and electrical engineering projects. Would those people still be regarded as working in the rail industry, and would the guarantee that they would retain their pensions under the BR fund still apply? I hope that the Secretary of State or the Minister will answer those questions.
The scheme offered in the modified option 1 is still a long way from the "comparable scheme" that the Secretary of State promised in the White Paper. In due course, it will become a closed scheme, with all that that implies for a more cautious investment strategy that is less likely to generate the surpluses from which pensioners have benefited in the past. It will deny future rail employees who are not currently BR employees the choice to join the main railway industry pension scheme. That will be brought about by a Government who say that they believe in choice and want to extend it. If the Government's proposal is accepted an Act of Parliament will deny choice.
When the scheme becomes a closed one, it will wither and die. What the Minister for Public Transport described to the Committee as the best-managed pension scheme in the country will be snuffed out over time. Perhaps that will be because the Government do not like to see a public pension scheme offering the sort of competition that private schemes cannot match. The Government are determined to peck away at the public sector pension scheme until private schemes can get a look in.
The Government's proposal will drive a wedge between former BR employees working for private railway companies and people taken on by the private companies who did not formerly work for BR. The private sector employee will be able to play one employee off against another. He will say, "I will offer you promotion only if you drop your pension rights, because your rights in the British Rail scheme are more costly than those of other employees." Former BR employees could price themselves

out of promotion and, ultimately, out of a job. That is no way to bring in a new age of railways, which is what the Government pretend privatisation will do.
An industrywide scheme that encompassed everybody in the industry now and in the future would bring benefits. Privatisation means that railway men and women, instead of working for BR throughout their working lives, will work for a number of employers, as franchisees come and go and as the management of routes, lines, functions or support services moves from one company to another.
It is a great boon not just to employees but to employers to be able to spend one's working life of service to the railways under a single scheme by which one can accrue benefits in the sure knowledge that on retirement the full 40 years of service would be reflected in a decent and secure pension. That would create the sort of stability that privatisation intends to disrupt. Only a little foresight, imagination and common sense by the Government would enable them to introduce such a scheme, but the Bill shows that foresight, imagination and common sense are qualities that the Government do not have.

Mr. Prescott: The debate has shown that considerable uncertainty exists about the Government's proposals. Hon. Members have tried to find the basis for that and to determine whether we can now trust the Secretary of State. All hon. Members are agreed that the debate is about the concern of pensioners.
The Government have made changes to the proposed legislation, some of which are considerable advances on the proposals contained in the document about changes to the pension funds. In that document, the Government said that they intended to listen. Pressure has contributed to the changes, but I doubt whether we can accept further Government promises.
I shall correct one or two points made by the Secretary of State about the options. He spoke about the 1980 Act and criticism by the Public Accounts Committee. The report by that Committee showed the public sector borrowing requirement liabilities that would accrue to the Treasury from an unfunded scheme. In its management of public funds, the Treasury is rightly concerned about the public sector borrowing requirement. Such liabilities may arise in future, and that leads one to conclude that the assets in the pension funds would be of short-term assistance to the Treasury in reducing the PSBR. In that context, option 2 would have been useful for the Government.
In Committee, there were eight or nine changes to the legislation and one or two more were announced on Thursday by the Secretary of State … Those changes are the result of discussions and pressures. The Secretary of State conceded to my hon. Friend the Member for York (Mr. Bayley) that one of the intentions of option 2 was to take the fund assets. The Secretary of State is right to say that, if the Treasury had done that, it would have been criticised by the Public Accounts Committee.
The point made by my hon. Friend the Member for York is certainly a sound one. The particular attraction of option 2 is that the Treasury would get a considerable amount of money—e estimate about £4 billion—and it is that proportion that would have been allocated, under such circumstances, to the current 220,000 pensioners. It


was clearly the Government's intention to consider that option as one of the possibilities, and it was right for us to draw attention to that.
At the first public meeting on this issue, in Chester, I pointed out that that was an option that the Government had in mind. That led to a tremendous reaction and brought into the political debate what I have identified as option 3—which we tabled as an amendment in Committee. Many thousands of pensioners agreed with that option. We made it clear that any consultation process should include option 3 rather than be limited to options 1 and 2.
We called on railway pensioners to sign in favour of option 3—including my father, who lives in Chester, and is one of the fund's pensioners. [HON. MEMBERS: "Oh!"] If that is a declared interest, I am proud to say that I have a father who was a railwayman and is a recipient under the pension fund. That is not a declared personal interest—but it has made me aware of the concern felt by pensioners.
A number of hon. Members—including my hon. Friend the Member for Nottingham, East (Mr. Heppell)—made it clear on Friday that they wanted an industrywide scheme—and that is what has eventually been achieved. They wanted it to be available to all employees, and that, too, has been established. They wanted that scheme to be available to the British Transport police fund, under a continuation of the closed fund, and that, too, has been established.
They also wanted it to be available to all the British Railways Board employees who might be transferred to other employers. That was the final change that the Secretary of State was to make—it was described as the "indefeasible right" of people. I received information that that right might be limited, but I assume from what the Secretary of State has said that that is not so.
But that is not guaranteed. Look at what has happened to some other pension funds, where an employer has a choice between keeping an employee with a more expensive pension fund and a new employee with a cheaper arrangement, because such rights will not apply to him. The Secretary of State is clear about that. He will not accept the amendment that we have tabled to ensure that the pension rights are available to anybody who becomes an employee of the rail industry. We will have two categories of employees—working for the same company, doing the same work—because the pension costs of one will be cheaper than those of the other.
The evidence for that can be found in some of the other privatised British Rail facilities, where, eventually, most of the employees were driven on to the cheaper scheme. They were then told that the scheme was no longer acceptable, because it could not fund itself, the scheme was closed down and then—surprise, surprise—the surplus assets were redistributed to the company, not to the pensioners. There is no guarantee under the Bill that this will not happen. All it says is that one set of employees will be more expensive in social cost than another.
Bearing in mind the Government's attitude towards Europe and social costs—apparently we pride ourselves on having the cheapest labour and cheapest costs—all the Secretary of State is doing is introducing a similar kind of discrimination because the "European" labour will be

those employees identified with the indefeasible right and those coming to the industry as new employees will get nothing.
Under those circumstances, I do not think that that right will last very long, because an employer who wants to compete for a particular line—let us say the east coast line—will be able to take on new employees on those new rates. He will also gain a competitive advantage from doing so, because he will be able to bring in new employees without the same pension rights. That is feeding the process of competition and undermining the social rights of employees who come directly under this process.
The Secretary of State said that he had no choice in this because, in the reorganisation, the definition for the suggested break-up of the pension funds comes from the tax authorities.
The Minister of State was good enough to provide me with a report in Committee which made it absolutely clear that there are two ways in which the Inland Revenue rules on membership of centralisation schemes apply. It is possible to have, under the Inland Revenue, an industrywide scheme without having to apportion the resources and assets to individual employees. It is possible to have that under the tax rules.
Committee paper No. 15, provided by the Government, makes it absolutely clear:
The Inland Revenue permit two types of schemes to be set up where more than one employer participates:

(a) A scheme established to provide benefits solely for the employees of associated employers and/or employees of employers who are associated through a permanent community of interest; and
(b) Schemes established to provide benefits for non-associated employers."
The Inland Revenue definition for the membership of the associated employees provides the crucial fact:
a centralised scheme for associated employers allows associated employers to provide benefits for all their employees. The associated employers can then adopt any method of funding as if it were a scheme for a single employer, and there need be no "separation" of ownership of assets between participating employers.
So the Government could privatise the railways and keep the pension fund as one fund, as we have called for today, without having to apportion the assets as they have suggested. The Government state that, according to the tax authorities' definition, there is no associated means or common ownership identity between the track authority and British Rail. It is the Government who have chosen to differentiate between the track authority, which will maintain the track, and the operators, in this case known as British Rail.
They have chosen to do that under their reorganisation of the railway system. They have created those separate identities. All the uncertainty arises from the route that the Government have chosen for the reorganisation and privatisation of the railways. The consequences for the pension fund flow from that.
All the uncertainty is of the Government's own making. Even if they had opted for privatisation, they could have retained a single, industrywide pension fund. That is what the employers, the trustees, the trade unions and the pensioners asked for, but the Government have not chosen to meet that request. That choice causes us to have even greater fears about the Government's possible intentions.
We have suggested that the Government's decision is based on the fact that they have their eyes on the assets of the pension fund. The Government have now made it clear


that they have opted for the closed fund, which will still operate within the British Rail pension fund. They must therefore satisfy the House and the pensioners that the terms of the new fund will be no less favourable than those of the old one.
Although the Government are establishing a closed fund of assets within the industry fund, that is no guarantee that that fund will operate on equally favourable conditions to those applying to the original fund. What is likely to happen is that that new fund will be paid what the assets can afford to give it.
There is some dispute about whether the regulations governing the new fund will be brought in on 1 April 1994; perhaps the Government can confirm that one way or another. Whenever that happens, a fund will be established for the pensioners out of the assets of their own original fund. The regulations will be approved by the House and the assets will be managed by the common fund management, but only after a given point in time.
Our new clause is designed to ensure that the judgment about that given time is that of the actuarial authorities and not of the Secretary of State. The new clause would not prevent the Secretary of State from doing what he wants to do, but we do not believe that he can meet his commitment to the effect that the new fund will exist on conditions no less favourable than those operating the original fund. The availability of assets may not allow for that, but we must wait for the decision of the actuarial authorities. We cannot learn of their decision, however, until the regulations and changes proposed by the Secretary of State are made.
At one time, it was the intention of the Secretary of State that the Treasury should have access to the fund. Let me outline a scenario that is not impossible under his terms. He may identify, in the division of the assets, those that will apply to the present pensioners. For the sake of debate, let us value those assets at £4 billion. Once he has identified them, they will be self-managed by the fund managers, with the proviso that, if possible, the same benefits as before will be paid. The Government may then decide, however, that it would be better for the pensioners if they reverted to option 1
He may say to them that the Government will guarantee that their pensions will be inflation-proof. That may look a lot more attractive when the pension fund, broken into its parts, begins not to perform as well as the present BR fund. The pensioners in the closed fund may then find such a guarantee rather attractive. They may then say that they would like to take the Government's original promise, now withdrawn, to inflation-proof the pensions.
7 pm
If pensioners went along that line—the Treasury may want to ask them whether that is the case—the Secretary of State could then go back to the option that he gave us before, whereby the Treasury get the £4 billion and then the Government continue to pay the yearly option. We think that that is wrong, but it is still a possibility. Even under this fund, the Secretary of State must admit that that is a possibility. He does not have to come to a judgment about that until some time after the passing of the Bill.
If the Secretary of State is asking me to accept his assurance that he has no intention of doing that, having already proposed it at one stage, I do not believe him. I do not know what the implications of that are, but I did not

believe the Tories who told us that they would not increase VAT. I did not accept the words of the Secretaries of State who told me that they would not increase prescription charges. That is a matter of political judgment. I do not accept the promise of the Secretary of State for Transport, any more than I did the other promises.
However, I am prepared to accept—we shall wait for history to decide who is right on that political judgment —that the new clause at least allows the judgment to be made. Whatever the Secretary of State does with the funds must be done with the agreement of the trustees on the basis of the actuarial authority's report, not his judgment after consulting the trustees. That is not good enough. We press the new clause because we want to give pensioners some assurance and protection.

Mr. MacGregor: I shall endeavour to be brief and, wherever possible, not repeat points that I made earlier. The hon. Member for Southampton, Itchen (Mr. Denham) complained that the announcement made last week came too late. It seems that one cannot win. If one decides to go out and consult on what are readily agreed by all to be extremely complex matters, and takes a reasonable proportion of time to enable all who have been consulted to consider them and respond, one is then accused of coming forward late with the proposals.
My hon. Friends the Members for Eastleigh (Mr. Milligan) and for City of Chester (Mr. Brandreth) were right. We looked carefully at all the issues before we drew up the original document in January. The document then listed eight issues about which views would be welcomed. As these are complex matters, it took time for everyone to respond, but that is what we did.
In the light of those responses, we took firm decisions. I had originally told everyone that I had hoped to make the decisions, knowing that it would he quite an effort, by the end of this month. I brought it forward to enable our decisions to inform this debate. I do not make any apologies for the time in which we announced the decisions, because I think that it was right to do the full consultation.

Mr. Denham: Does the Secretary of State accept that my point was not so much that we got the final version last Thursday as that the Government's outline plans, which have caused so much fuss, came forward only in January, while the rest of the privatisation proposals were published last July?

Mr. MacGregor: These are complex issues, as is shown by the way in which the responses have come through, and we took some time so as to offer fair choices.
The hon. Member for Nottingham, East (Mr. Heppell) has to accept that one can give no guarantees about the performance of funds. There are some 60 British Rail closed funds. Some are small, but one is very large. They have performed well throughout the 1980s, but there is no guarantee that any of them will continue to perform that well. When it eventually gets to the point of being a closed fund, the new fund will be very large.
My hon. Friend the Member for Eastleigh (Mr. Milligan) was right to say that performance can be variable, and that there can be no guarantee of indexation even within an open fund. It will depend on the performance of the economy and of the trustees. I find it ironic that we were offering option 2 as a safe guarantee to existing pensioners when I know that many employees and


pensioners in occupational funds in other sectors of the economy look with envious eyes at the civil service guaranteed index-linked pension fund. I thought that we were making a pretty fair offer.
Did I hear the hon. Member for Kingston upon Hull, East (Mr. Prescott) correctly? Did he say that I should keep open the possibility of the option that he has so derided up to now and that has been the basis of his accusation that the Treasury wishes to purloin funds? If that is what he meant, he has performed an interesting somersault.

Mr. Prescott: If the reorganisation of the pension fund that the Government intend to make makes it less of a contributor to the inflation payments and real value increases that have been made under the old scheme, pensioners might feel that any promise of a link to inflation was better than what would result from the performance of the new pension fund. In those circumstances, the Secretary of State might want to consult them again, to offer them option 1 or option 2, because the Treasury would then have a chance to get at the £4 billion.

Mr. MacGregor: I have already made it clear that the Treasury getting its hands on the funds is not the purpose of option 2, and never was. The purpose is entirely to give a reasonable alternative choice to pensioners. By and large, they have rejected that, which is why we have come to the conclusion on the two options that we have offered.
It is an interesting suggestion that if, in 10 years' time, they realise that they have made the wrong choice—I am talking entirely hypothetically—they should be able to change their minds. That underlines the point that I was making. There can be no guarantee of performance on either an open or closed fund that does not have the benefit of a full Government guarantee. The choice has been made, and I have responded favourably to the choice that most people wanted.
Millions of individuals have personal pensions and, on their retirement, will be dependent entirely on the performance of funds. That will be individual to them, as with life policies, and it will vary between individuals. That is in the nature of the performance of investment funds. The hon. Member for Nottingham, East again made the accusation that the Government will purloin the funds, but there is no question of that. The pensions belong to the pensioners, and I have made that clear.
The hon. Member for Bristol, East (Ms Corston), who is no longer here, asked what would happen to the fund, once it had closed, when there was no employer. There was a slight implication that the Government should step in and secure some of the funds in such a case. There is no question of that. When the fund is closed, no one other than the pensioners will be the beneficiaries of the fund, and it will be for the pensioner trustees to decide how to do that.
The hon. Members for Wrexham (Dr. Marek) and for Kingston upon Hull, East spoke of the necessity of having the approval of the trustees for every step that would be taken. There is a difficulty about that, because in effect it amounts to a veto. Opposition Members have said that, while I might be reasonable in all the decisions that I take, some future Secretary of State might not, so one has to look at all possible situations.
The pensioner trustees might refuse to agree to any solution other than an enormous skewing of the division of funds, against actuarial advice, in favour of the existing pensioners. I do not think that that would happen, but we must allow the House to make the final decision rather than leaving it totally to the pensioner trustees. If they had a total veto, they would have a power that could be exercised against the interests of future taxpayers who would have to top up any existing pension funds.
That is one reason why we cannot accept the veto. I have made it clear that we shall consult the pensioner trustees, and that the division of the funds when that point comes will be based on independent actuarial advice. There will be no question of political interference. The matter will be discussed fully in the House, with an independent report if the pensioner trustees disagree on anything, and decided by affirmative resolution.
I want to make one thing clear to the hon. Member for Hampstead and Highgate (Ms Jackson) about the joint industry scheme. Where any employer, including any future employer, has some employees who have stayed within the scheme because they have exercised what is known as their indefeasible right to do so, that employer will have to be in the joint industry scheme for those employees.
However, new employees—this is the difference between us—will not have the right, by right, to join that scheme. We believe that the pension rights for new employees of franchisees, recruited in the future, must be a matter for negotiation between the new employee and the employer. It is not for the Government to dictate the terms and conditions of employment for new recruits.
My hon. Friend the Member for Eastleigh (Mr. Milligan) asked me about the position under a closed scheme. When the fund is closed, it will have sufficient funds to secure the actuarially calculated liabilities. That is a crucial point for all pensioners, and it underlines the points that I have made about independent actuarial valuation. The benefits will be as stated in the rules, including index-linking, but if the fund does better than expected, further enchancements to benefits may be made. That will be a decision for the pension trustees.
The hon. Member for York (Mr. Bayley) prayed in aid the Financial Times in suggesting that others had also said that the Government wanted to purloin the pension funds. He quoted the figure of £8·5 billion, which actually shows the inaccuracy of that report. By no stretch of the imagination could it ever he said that the sum involved was £8·5 billion.
The article was also wrong to suggest that I was beating a retreat. In no way could I have been doing so, when I was still consulting and had not made a decision. In any case, I had two options available, so there could not have been any retreat. I made it clear that, at those early stages, we were not stating any preference for either of the options.
If the hon. Gentleman thinks that, when the Financial Times speaks, it is always right, as he suggested, I hope that he will read its leader today on our reforms as a whole, and support us in the Lobby on Third Reading. The leader comments favourably on the proposals as a whole.
We have had a full debate on this important matter. I warmly welcome that, because the pensions issue is extremely important. I commend the Government's amendments but, for the reasons that I have given, I must reject the new clause.

Dr. Marek: In view of the right hon. Gentleman's acceptance of the spirit of new clause 3 and amendment No. 2, and his undertaking that he will rephrase them and put them in a more appropriate place in the Bill when it reaches another place, I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.

New clause 29

JOINT INDUSTRY PENSION SCHEME

'.—(1) Subject to subsection (2) below, the Secretary of State shall not exercise any of his functions under this Act relating to pensions until he has consulted the trustees of any existing scheme (within the meaning of Schedule 10) and such other persons as may have an interest, or appear to the Secretary of State to represent persons having an interest in any existing scheme, as to the feasibility of establishing a joint industry scheme, the form such a scheme might take, and the implications for participants in existing schemes.

(2) Subsection (1) above shall not apply in any case where the trustees of a scheme have received actuarial advice that the fund may not be able to meet any of its actual or projected liabilities at any time from its actual or projected assets.'.—[Mr. Prescott.]

Brought up, and read the First time.

Motion made, and Question put, That the clause be read a Second time—

The House divided: Ayes 270, Noes 304.

Division No. 278]
[7 13 pm


AYES


Abbott, Ms Diane
Clapham, Michael


Adams, Mrs Irene
Clark, Dr David (South Shields)


Ainger, Nick
Clarke, Eric (Midlothian)


Ainsworth, Robert (Cov'try NE)
Clarke, Tom (Monklands W)


Allen, Graham
Clelland, David


Anderson, Donald (Swansea E)
Clwyd, Mrs Ann


Anderson, Ms Janet (Ros'dale)
Coffey, Ann


Armstrong, Hilary
Connarty, Michael


Ashdown, Rt Hon Paddy
Cook, Robin (Livingston)


Ashton, Joe
Corbett, Robin


Austin-Walker, John
Corbyn, Jeremy


Banks, Tony (Newham NW)
Corston, Ms Jean


Barnes, Harry
Cousins, Jim


Barron, Kevin
Cox, Tom


Battle, John
Cryer, Bob


Bayley, Hugh
Cummings, John


Beckett, Rt Hon Margaret
Cunliffe, Lawrence


Beith, Rt Hon A. J.
Cunningham, Jim (Covy SE)


Bell, Stuart
Cunningham, Rt Hon Dr John


Benn, Rt Hon Tony
Dafis, Cynog


Bennett, Andrew F.
Dalyell, Tam


Benton, Joe
Darling, Alistair


Bermingham. Gerald
Davidson, Ian


Berry, Dr. Roger
Davies, Bryan (Oldham C'tral)


Betts, Clive
Davies, Rt Hon Denzil (Llanelli)


Blair, Tony
Davies, Ron (Caerphilly)


Boateng, Paul
Davis, Terry (B'ham, H'dge H'l)


Boyce, Jimmy
Denham, John


Boyes, Roland
Dewar, Donald


Bradley, Keith
Dixon, Don


Bray, Dr Jeremy
Dobson, Frank


Brown, Gordon (Dunfermline E)
Donohoe, Brian H.


Brown, N. (N'c'tle upon Tyne E)
Dowd, Jim


Bruce, Malcolm (Gordon)
Dunnachie, Jimmy


Burden, Richard
Dunwoody, Mrs Gwyneth


Byers, Stephen
Eagle, Ms Angela


Caborn, Richard
Eastham, Ken


Callaghan, Jim
Enright, Derek


Campbell, Mrs Anne (C'bridge)
Etherington, Bill


Campbell, Menzies (Fife NE)
Evans, John (St Helens N)


Campbell-Savours, D. N.
Ewing, Mrs Margaret


Canavan, Dennis
Fatchett, Derek


Cann, Jamie
Field, Frank (Birkenhead)


Chisholm, Malcolm
Fisher, Mark





Flynn, Paul
McNamara, Kevin


Foster, Rt Hon Derek
Madden, Max


Foulkes, George
Mandelson, Peter


Fraser, John
Marek, Dr John


Fyfe, Maria
Marshall, David (Shettleston)


Galbraith, Sam
Marshall, Jim (Leicester, S)


Galloway, George
Martlew, Eric


Gapes, Mike
Maxton, John


Garrett, John
Meacher, Michael


George, Bruce
Meale, Alan


Gerrard, Neil
Michael, Alun


Gilbert, Rt Hon Dr John
Michie, Bill (Sheffield Heeley)


Godman, Dr Norman A.
Michie, Mrs Ray (Argyll Bute)


Godsiff, Roger
Milburn, Alan


Golding, Mrs Llin
Miller, Andrew


Gordon, Mildred
Mitchell, Austin (Gt Grimsby)


Gould, Bryan
Molyneaux, Rt Hon James


Graham, Thomas
Moonie, Dr Lewis


Grant, Bernie (Tottenham)
Morgan, Rhodri


Griffiths, Nigel (Edinburgh S)
Morley, Elliot


Griffiths, Win (Bridgend)
Morris, Rt Hon A. (Wy'nshawe)


Grocott, Bruce
Morris, Estelle (B'ham Yardley)


Gunnell, John
Morris, Rt Hon J. (Aberavon)


Hain, Peter
Mowlam, Marjorie


Hall, Mike
Mudie, George


Hanson, David
Murphy, Paul


Hardy, Peter
Oakes, Rt Hon Gordon


Harman, Ms Harriet
O'Brien, Michael (N W'kshire)


Harvey, Nick
O'Brien, William (Normanton)


Hattersley, Rt Hon Roy
O'Hara, Edward


Henderson, Doug
Olner, William


Heppell, John
Orme, Rt Hon Stanley


Hill, Keith (Streatham)
Parry, Robert


Hinchliffe, David
Patchett, Terry


Hoey, Kate
Pendry, Tom


Hogg, Norman (Cumbernauld)
Pickthall, Colin


Hood, Jimmy
Pike, Peter L.


Hoon, Geoffrey
Pope, Greg


Howarth, George (Knowsley N)
Powell, Ray (Ogmore)


Howeils, Dr. Kim (Pontypridd)
Prentice, Ms Bridget (Lew'm E)


Hoyle, Doug
Prentice, Gordon (Pendle)


Hughes, Kevin (Doncaster N)
Prescott, John


Hughes, Robert (Aberdeen N)
Primarolo, Dawn


Hughes, Roy (Newport E)
Purchase, Ken


Hughes, Simon (Southwark)
Quin, Ms Joyce


Hutton, John
Radice, Giles


Ingram, Adam
Randall. Stuart


Jackson, Glenda (H'stead)
Raynsford, Nick


Jackson, Helen (Shef'ld, H)
Redmond, Martin


Jamieson, David
Reid, Dr John


Jones, Barry (Alyn and D'side)
Rendel, David


Jones, Ieuan Wyn (Ynys Môn)
Robertson, George (Hamilton)


Jones, Jon Owen (Cardiff C)
Robinson, Geoffrey (Co'try NW)


Jones, Lynne (B'ham S O)
Roche, Mrs. Barbara


Jones, Martyn (Clwyd, SW)
Rogers, Allan


Jowell, Tessa
Rooker, Jeff


Kaufman, Rt Hon Gerald
Rooney, Terry


Keen, Alan
Ross, Ernie (Dundee W)


Kennedy, Charles (Ross, C&amp;S)
Rowlands, Ted


Kennedy, Jane (Lpool Brdgn)
Ruddock, Joan


Khabra, Piara S.
Salmond, Alex


Kilfoyle, Peter
Sedgemore, Brian


Kirkwood, Archy
Sheerman, Barry


Leighton, Ron
Sheldon, Rt Hon Robert


Lestor, Joan (Eccles)
Shore, Rt Hon Peter


Litherland, Robert
Short, Clare


Livingstone, Ken
Simpson, Alan


Lloyd, Tony (Stretford)
Skinner, Dennis


Llwyd, Elfyn
Smith, Andrew (Oxford E)


Loyden, Eddie
Smith, C. (Isl'ton S &amp; F'sbury)


Lynne, Ms Liz
Smith, Rt Hon John (M'kl'ds E)


McAllion, John
Smith, Llew (Blaenau Gwent)


McAvoy, Thomas
Snape, Peter


McCartney, Ian
Soley, Clive


Macdonald, Calum
Spearing, Nigel


McFall, John
Steinberg, Gerry


McKelvey, William
Stevenson, George


Mackinlay, Andrew
Stott, Roger


McLeish, Henry
Strang, Dr. Gavin


McMaster, Gordon
Straw, Jack






Taylor, Mrs Ann (Dewsbury)
Wigley, Dafydd


Taylor, Matthew (Truro)
Williams, Rt Hon Alan (Sw'n W)


Thompson, Jack (Wansbeck)
Williams, Alan W (Carmarthen)


Tipping, Paddy
Wilson, Brian


Turner, Dennis
Winnick, David


Tyler, Paul
Wise, Audrey


Walker, Rt Hon Sir Harold
Worthington, Tony


Wallace, James
Wray, Jimmy


Walley, Joan
Young, David (Bolton SE)


Wardell, Gareth (Gower)



Wareing, Robert N
Tellers for the Ayes:


Watson, Mike
Mr. John Spellar and Mr. Eric Illsley.


Wicks, Malcolm





NOES


Ainsworth, Peter (East Surrey)
Curry, David (Skipton &amp; Ripon)


Aitken, Jonathan
Davies, Quentin (Stamford)


Alexander, Richard
Davis, David (Boothferry)


Alison, Rt Hon Michael (Selby)
Day, Stephen


Amess, David
Deva, Nirj Joseph


Ancram, Michael
Devlin, Tim


Arbuthnot, James
Dickens, Geoffrey


Arnold, Jacques (Gravesham)
Dicks, Terry


Arnold, Sir Thomas (Hazel Grv)
Dorrell, Stephen


Ashby, David
Douglas-Hamilton, Lord James


Aspinwall, Jack
Dover, Den


Atkinson, David (Bour'mouth E)
Duncan, Alan


Atkinson, Peter (Hexham)
Duncan-Smith, Iain


Baker, Rt Hon K. (Mole Valley)
Dunn, Bob


Baker, Nicholas (Dorset North)
Dykes, Hugh


Baldry, Tony
Eggar, Tim


Banks, Matthew (Southport)
Elletson, Harold


Bates, Michael
Evans, David (Welwyn Hatfield)


Batiste, Spencer
Evans, Jonathan (Brecon)


Bellingham, Henry
Evans, Roger (Monmouth)


Bendall, Vivian
Evennett, David


Beresford, Sir Paul
Faber, David


Biffen, Rt Hon John
Fabricant, Michael


Blackburn, Dr John G.
Fenner, Dame Peggy


Body, Sir Richard
Field, Barry (Isle of Wight)


Booth, Hartley
Fishburn, Dudley


Boswell, Tim
Forman, Nigel


Bottomley, Peter (Eltham)
Forsyth, Michael (Stirling)


Bottomley, Rt Hon Virginia
Fowler, Rt Hon Sir Norman


Bowden, Andrew
Fox, Dr Liam (Woodspring)


Bowis, John
Fox, Sir Marcus (Shipley)


Boyson, Rt Hon Sir Rhodes
Freeman, Roger


Brandreth, Gyles
French, Douglas


Brazier, Julian
Fry, Peter


Bright, Graham
Gale, Roger


Brooke, Rt Hon Peter
Gallie, Phil


Brown, M. (Brigg &amp; Cl'thorpes)
Gardiner, Sir George


Browning, Mrs. Angela
Garel-Jones, Rt Hon Tristan


Bruce, Ian (S Dorset)
Garnier, Edward


Budgen, Nicholas
Gill, Christopher


Burns, Simon
Gillan, Cheryl


Burt, Alistair
Goodson-Wickes, Dr Charles


Butler, Peter
Gorst, John


Butterfill, John
Grant, Sir Anthony (Cambs SW)


Carlisle, John (Luton North)
Greenway, Harry (Ealing N)


Carlisle, Kenneth (Lincoln)
Greenway, John (Ryedale)


Carrington, Matthew
Griffiths, Peter (Portsmouth, N)


Carttiss, Michael
Grylls, Sir Michael


Cash, William
Hague, William


Channon, Rt Hon Paul
Hamilton, Neil (Tatton)


Churchill, Mr
Hampson, Dr Keith


Clappison, James
Hannam, Sir John


Clark, Dr Michael (Rochford)
Hargreaves, Andrew


Clarke, Rt Hon Kenneth (Ruclif)
Harris, David


Clifton-Brown, Geoffrey
Haselhurst, Alan


Coe, Sebastian
Hawkins, Nick


Congdon, David
Hawksley, Warren


Conway, Derek
Hayes, Jerry


Coombs, Anthony (Wyre For'st)
Heald, Oliver


Coombs, Simon (Swindon)
Heath, Rt Hon Sir Edward


Cope, Rt Hon Sir John
Heathcoat-Amory, David


Cormack, Patrick
Hendry, Charles


Couchman, James
Heseltine, Rt Hon Michael


Cran, James
Hicks, Robert


Currie, Mrs Edwina (S D'by'ire)
Higgins, Rt Hon Sir Terence L.





Hill, James (Southampton Test)
Ottaway, Richard


Hogg, Rt Hon Douglas (G'tham)
Page, Richard


Horam, John
Paice, James


Hordern, Rt Hon Sir Peter
Patnick, Irvine


Howard, Rt Hon Michael
Patten, Rt Hon John


Howarth, Alan (Strat'rd-on-A)
Pattie, Rt Hon Sir Geoffrey


Howell, Rt Hon David (G'dford)
Peacock, Mrs Elizabeth


Howell, Ralph (North Norfolk)
Pickles, Eric


Hughes Robert G. (Harrow W)
Porter, Barry (Wirral S)


Hunt, Rt Hon David (Wirral W)
Porter, David (Waveney)


Hunt, Sir John (Ravensbourne)
Portillo, Rt Hon Michael


Hunter, Andrew
Powell, William (Corby)


Hurd, Rt Hon Douglas
Rathbone, Tim


Jack, Michael
Redwood, John


Jackson, Robert (Wantage)
Renton, Rt Hon Tim


Jenkin, Bernard
Richards, Rod


Jessel, Toby
Riddick, Graham


Jones, Gwilym (Cardiff N)
Rifkind, Rt Hon. Malcolm


Jones, Robert B. (W Hertfdshr)
Robathan, Andrew


Jopling, Rt Hon Michael
Roberts, Rt Hon Sir Wyn


Kellett-Bowman, Dame Elaine
Robertson, Raymond (Ab'd'n S)


Key, Robert
Robinson, Mark (Somerton)


Kilfedder, Sir James
Roe, Mrs Marion (Broxbourne)


King, Rt Hon Tom
Rowe, Andrew (Mid Kent)


Knapman, Roger
Rumbold, Rt Hon Dame Angela


Knight, Mrs Angela (Erewash)
Ryder, Rt Hon Richard


Knight, Greg (Derby N)
Sackville, Tom


Knight, Dame Jill (Bir'm E'st'n)
Sainsbury, Rt Hon Tim


Knox, David
Scott, Rt Hon Nicholas


Kynoch, George (Kincardine)
Shaw, David (Dover)


Lait, Mrs Jacqui
Shaw, Sir Giles (Pudsey)


Lamont, Rt Hon Norman
Shephard, Rt Hon Gillian


Lang, Rt Hon Ian
Shepherd, Colin (Hereford)


Lawrence, Sir Ivan
Shersby, Michael


Legg, Barry
Sims, Roger


Leigh, Edward
Skeet, Sir Trevor


Lennox-Boyd, Mark
Smith, Sir Dudley (Warwick)


Lester, Jim (Broxtowe)
Smith, Tim (Beaconsfield)


Lidington, David
Soames, Nicholas


Lightbown, David
Speed, Sir Keith


Lilley, Rt Hon Peter
Spencer, Sir Derek


Lloyd, Peter (Fareham)
Spicer, Sir James (W Dorset)


Lord, Michael
Spicer, Michael (S Worcs)


Luff, Peter
Spink, Dr Robert


Lyell, Rt Hon Sir Nicholas
Spring, Richard


MacGregor, Rt Hon John
Sproat, Iain


MacKay, Andrew
Squire, Robin (Hornchurch)


Maclean, David
Stanley, Rt Hon Sir John


McLoughlin, Patrick
Steen, Anthony


McNair-Wilson, Sir Patrick
Stephen, Michael


Madel, David
Stern, Michael


Maitland, Lady Olga
Stewart, Allan


Major, Rt Hon John
Streeter, Gary


Malone, Gerald
Sumberg, David


Mans, Keith
Sweeney, Walter


Marland, Paul
Sykes, John


Marlow, Tony
Tapsell, Sir Peter


Marshall, John (Hendon S)
Taylor, Ian (Esher)


Marshall, Sir Michael (Arundel)
Taylor, John M. (Solihull)


Martin, David (Portsmouth S)
Taylor, Sir Teddy (Southend, E)


Mawhinney, Dr Brian
Temple-Morris, Peter


Mellor, Rt Hon David
Thomason, Roy


Merchant, Piers
Thompson, Sir Donald (C'er V)


Milligan, Stephen
Thompson, Patrick (Norwich N)


Mills, Iain
Thornton, Sir Malcolm


Mitchell, Andrew (Gedling)
Thurnham, Peter


Mitchell, Sir David (Hants NW)
Townend, John (Bridlington)


Moate, Sir Roger
Townsend, Cyril D. (Bexl'yh'th)


Monro, Sir Hector
Tracey, Richard


Montgomery, Sir Fergus
Tredinnick, David


Moss, Malcolm
Trend, Michael


Needham, Richard
Trotter, Neville


Nelson, Anthony
Twinn, Dr Ian


Neubert, Sir Michael
Vaughan, Sir Gerard


Newton, Rt Hon Tony
Waldegrave, Rt Hon William


Nicholson, David (Taunton)
Walker, Bill (N Tayside)


Nicholson, Emma (Devon West)
Waller, Gary


Norris, Steve
Ward, John


Onslow, Rt Hon Sir Cranley
Wardle, Charles (Bexhill)


Oppenheim, Phillip
Waterson, Nigel






Watts, John
Winterton, Nicholas (Macc'f'ld)


Wells, Bowen
Wolfson, Mark


Wheeler, Rt Hon Sir John
Wood, Timothy


Whitney, Ray
Yeo, Tim


Whittingdale, John
Young, Sir George (Acton)


Widdecombe, Ann



Wiggin, Sir Jerry
Tellers for the Noes:


Wilkinson, John
Mr. Sydney Chapman and Mr. Timothy Kirkhope.


Willetts, David

Question accordingly negatived.

Orders of the Day — Schedule 10

PENSIONS

Amendments made: No. 106, in page 165, line 20, at end insert:
'Payments in final discharge of liabilities under s.52(1) of the Transport Act 1980
7A.—(1) In section 52 of the Transport Act 1980, in subsection (1) (which requires the Secretary of State to make payments each year to B.R. pension schemes in respect of unfunded pension obligations owed by the Board), after the words "Subject to the provisions of this section" there shall be inserted the words ", section 52A" and after that section there shall be inserted—

"Power to make payments by way of final discharge of
liabilities under s.52(1).

52A.—(1) If the Minister is desirous of making to the persons administering a B.R. pension scheme one or more payments by way of final discharge of his liability to make payments to them under section 52(1) in respect of the proportion which has not been funded, as determined for the purposes of section 52(1)(a), of so much of any relevant pension obligations as are owed in respect of —

(a) all pension rights under the scheme,
(b) pension rights of some particular class or description under the scheme, or
(c) pension rights of persons of some particular class or description under the scheme,
he may give to the persons administering the scheme a notice identifying the pension rights in question and specifying in relation to those pension rights the matters set out in subsection (2), as determined in accordance with the following provisions of this section.

(2) The matters mentioned in subsection (1) are—

(a) the capital value of the attributable unfunded obligations in question, as at the beginning of the next financial year;
(b) the amount or amounts, or the method of determining the amount or amounts, of the payment or payments to be made under this section by way of final discharge of the Minister's liability under section 52(1) to make payments in respect of the attributable unfunded obligations; and
(c) the date or dates on which that payment or those payments are to be made.

(3) In making any determination for the purposes of paragraph (b) of subsection (2), the amount or, as the case may be, the aggregate of the amounts mentioned in that paragraph shall be such as to include—

(a) a sum equal to the capital value determined under paragraph (a) of that subsection; and
(b) interest, payable at such rate as may be determined by the Minister, on so much (if any) of that sum as may from time to time be outstanding after the beginning of the financial year mentioned in the said paragraph (a).

(4) For the purposes of this section, the capital value mentioned in paragraph (a) of subsection (2) shall either—

(a) he determined by the Minister, or
(b) if the Minister so requires in the particular case, be determined by the actuary to the scheme in question and approved by the Minister,

and it shall be for the Minister to determine the matters mentioned in paragraphs (b) and (c) of that subsection.

(5) Notice under subsection (1) above shall only he given after consultation—

(a) with the persons administering the scheme in question; and
(b) with the actuary to that scheme, except in a case where the capital value mentioned in subsection (2)(a) is determined by that actuary pursuant to subsection (4)(b);

and any such notice must be given not less than one month before the beginning of the financial year mentioned in subsection (2)(a).

(6) The giving of a notice under subsection (1) shall—

(a) terminate the liability of the Minister to make payments under section 52(1) in respect of the attributable unfunded obligations in question for financial years beginning after the giving of the notice; and
(b) impose upon the Minister a duty—

(i) to make to the persons administering the scheme in question the payment or payments mentioned in subsection (2)(b); and
(ii) to do so at the time or times specified in pursuance of subsection (2)(c).

(7) Where notice has been given under subsection (1), the Minister may—
(a) at any time before the expiration of the period of eleven months beginning with the financial year mentioned in subsection (2)(a) as it applies in relation to that notice, and
(b) after consultation with the persons administering the scheme in question and the actuary to the scheme,

amend that notice by giving notice of the amendment to the persons administering the scheme.

(8) If notice is given under subsection (7) of an amendment affecting the amount of a payment which has been made pursuant to this section, the Minister may also give notice to the persons administering the scheme in question requiring them—
(a) to repay to him so much of the payment made as exceeds the amended amount; and
(b) to pay interest to him, at such rate as he may determine, on the amount to be repaid, as from the date on which the payment in question was made by him;

and where notice is given under paragraph (a) or (b), the amount required to be repaid or, as the case may he, the amount of interest required to be paid from time to time, shall be treated as a debt due from those persons to the Minister.

(9) Nothing in this section affects the liability of the Board in respect of any relevant pension obligations, but where any liability of the Minister to make payments under section 52(1) has been terminated by virtue of paragraph (a) of subsection (6), the amount of any payments required to be made by the Minister under section 52(1) shall be determined for each of the financial years mentioned in that paragraph as if the Board's liability in respect of the attributable unfunded obligations mentioned in that paragraph had been discharged.

(10) In this section
attributable unfunded obligations" means the proportion which has not been funded, as determined for the purposes of section 52(1)(a), of so much of the relevant pension obligations mentioned in subsection (1) as are owed in respect of the pension rights identified pursuant to that subsection;
capital value", in relation to any attributable unfunded obligations, means the capital equivalent, actuarially determined, of the payments that would, apart from this section, have been expected to be made by the Minister under section 52(1) in respect of those attributable unfunded obligations for the successive financial years beginning with the one mentioned in subsection (2)(a).

(11) Any sums required for the making of payments under this section by the Minister shall be paid out of money provided by Parliament."

(2) In section 70 of that Act, in subsection (2), (interpretation) for the definition of "the Minister" there shall be substituted—
"the Minister" means the Secretary of State;

Application and modification of Part III of the 1980 Act

7B.—(1) The Secretary of State may by order designate—

(a) any occupational pension scheme which would not, apart from this paragraph, be included among the pension schemes which are B.R. pension schemes for the purposes of Part III of the 1980 Act, or
(b) any section of an occupational pension scheme,
being a section which would not, apart from this
paragraph, be included among those schemes,
as a pension scheme which is to be treated as included among those schemes for the purpose of requiring or enabling him to make to the persons administering the scheme payments under section 52(1) or 52A of that Act in respect of qualifying pension rights transferred (whether under paragraph 4 above or otherwise) so as to become pension rights under that scheme.

(2) An order under sub-paragraph (1) above may make provision, in any case where qualifying pension rights of any persons are transferred as mentioned in that sub-paragraph, for treating those persons as constituting a section of the occupational pension scheme to which those qualifying pension rights are so transferred.

(3) No order shall be made under sub-paragraph (1) above except after consultation with the trustees of the occupational pension scheme to which the qualifying pension rights are transferred.

(4) Subject to the following provisions of this paragraph, Part III of the 1980 Act shall have effect as if any reference in that Part to a B.R. pension scheme included a reference to a designated scheme.

(5) Where qualifying pension rights are transferred to a designated scheme as mentioned in sub-paragraph (1) above, the proportion referred to in section 52(1)(a) of the 1980 Act in its application by virtue of this paragraph in relation to the designated scheme shall, instead of being determined under section 54 of that Act, be taken to be the proportion which has been determined under that section in relation to the B.R. pension scheme from which the qualifying pension rights are transferred; and references in Part III of that Act to that proportion shall be construed accordingly.

(6) In the application of Part III of the 1980 Act in relation to a designated scheme, references in that Part to "the relevant pension obligations" shall, in relation to the designated scheme, be construed—

(a) as if the reference in section 53(1)(a) of that Act to obligations of the Board which were owed on 1st January 1975 in connection with the scheme were a reference to so much of the obligations of the Board which were owed on that date in connection with a B.R. pension scheme as are obligations in respect of qualifying pension rights transferred to the designated scheme; and
(b) as if the reference in section 53(1)(c) of that Act to an obligation of the Board arising after that date to pay or secure the payment of increases payable under the scheme included a reference to so much of any such obligation of the Board in respect of a B.R. pension scheme as is an obligation in respect of qualifying pension rights transferred to the designated scheme.

(7) In the application of section 55 of the 1980 Act in relation to a designated scheme, paragraph (a) of subsection (1) (which requires the proportion of the scheme's outgoings which corresponds to the relevant pension obligations to be determined before the beginning of each financial year or, in the case of the first financial year, as soon as practicable after

the passing of that Act) shall be taken to require the proportion mentioned in that paragraph to be determined—

(a) before the beginning of the financial year in question, or
(b) as soon as practicable after the coming into force of the order under sub-paragraph (1) above by virtue of which the scheme in question is a designated scheme,
and paragraph (b) of that subsection shall be construed accordingly.

(8) The power to give a direction under section 57 of the 1980 Act (which provides for certain determinations to be made as if no transfer had taken place) shall be exercisable in any case where the whole or any part of a person's accrued pension rights under a B.R. pension scheme or a designated scheme are transferred (whether under paragraph 4 above or otherwise) to—
(a) a designated scheme, or
(b) a pension scheme established by the Board,
as it is in the case of any such transfer as is mentioned in that section.

(9) Without prejudice to section 59(1) of the 1980 Act (which provides that the making of payments under section 52(1) does not discharge certain relevant pension obligations), the making of any payment under section 52(1) of the 1980 Act to the persons administering a designated scheme shall not discharge any relevant pension obligation, so far as it is an obligation to pay pensions or increases of pensions under that or any other designated scheme, or under a B.R. pension scheme, or is an obligation to secure the payment of those pensions or increases.

(10) Without prejudice to section 59(2) of the 1980 Act (power to amend pension scheme for certain purposes), if the persons administering an occupational pension scheme would not otherwise have power to do so, they may amend the scheme by instrument in writing for the purpose of enabling persons to be admitted as members of the scheme on the basis that payments will fall to be made under Part III of the 1980 Act in respect of qualifying pension rights of theirs which are transferred so as to become pension rights under the scheme.

(11) Where the persons administering an occupational scheme have power, apart from sub-paragraph (10) above, to amend the scheme for the purpose mentioned in that sub-paragraph, they may exercise that power for that purpose without regard to any limitations on the exercise of the power and without compliance with any procedural provisions applicable to its exercise.

(12) Any reference in Part III of the 1980 Act to a "financial year" shall, in relation to a designated scheme, be taken as a reference—

(a) to such period as—

(i) begins with the transfer of the qualifying pension rights in question, and
(ii) ends with the last day of an accounting year of the scheme,
and is a period of not less than twelve months and less than two years; and
(b) to each successive accounting year of that scheme.

(13) Where any provision of Part III of the 1980 Act requires anything to be done in, or in relation to, the first financial year of a B.R. pension scheme, that provision shall (so far as so requiring) be disregarded in the application of that Part in relation to a designated scheme.

(14) In any case where—
(a) the whole or any part of a person's accrued pension rights under a B.R. pension scheme are transferred so as to become pension rights under a designated scheme, and
(b) immediately before that transfer takes effect, relevant pension obligations a proportion of which, as determined for the purposes of section 52(1)(a) of the 1980 Act, has not been funded are owed in respect of those pension rights by the Board to the persons administering the pension scheme from which the pension rights are so transferred,


an order under sub-paragraph (1) above may provide for the benefit of that proportion of so much of those relevant pension obligations as are owed in respect of those pension rights to be transferred, so as to become relevant pension obligations owed by the Board to the persons administering the pension scheme to which the pension rights are transferred.

(15) Where the benefit of any relevant pension obligations is transferred by virtue of sub-paragraph (14) above, the persons administering the pension scheme to which the benefit of those obligations is transferred shall have, in relation to the relevant pension obligations the benefit of which is so transferred, all the rights of the persons administering the pension scheme from which the benefit of those obligations is transferred.

(16) In this paragraph—
the 1980 Act" means the Transport Act 1980;
designated scheme" means an occupational pension scheme or, as the case may be, a section of any such scheme, which is designated under sub-paragraph (1) above;
pension scheme" includes a section of a pension scheme;
qualifying pension rights" means any pension rights as respects the whole or some part of which there are subsisting relevant pension obligations a proportion of which, as determined for the purposes of section 52(1)(a) of the 1980 Act, has not been funded;
and, subject to that, expressions used in this paragraph and in Part III of the 1980 Act have the same meaning in this paragraph as they have in that Part.'.

No. 107, in page 165, line 29, leave out sub-paragraph (2).—[Mr. MacGregor]

Orders of the Day — New clause 16

CONTRACTS BETWEEN THE FRANCHISING DIRECTOR AND THE BOARD ETC. FOR THE PROVISION OF NON-FRANCHISED RAILWAY PASSENGER SERVICES

'.—(1) The Franchising Director may enter into agreements with the Board or any wholly owned subsidiary of the Board for the provision by the Board or subsidiary of any railway passenger services which are not provided under a franchise agreement.
(2) Any sums required by the Franchising Director for the making of payments under any agreement entered into by virtue of this section shall be paid by the Secretary of State out of money provided by Parliament.
(3) Any sums received by the Franchising Director under any such agreement shall be paid into the Consolidated Fund' —[Mr. MacGregor]

Brought up, and read the First time.

Mr. MacGregor: I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker (Mr. Geoffrey Lofthouse): With this it will be convenient to discuss also new clause 27—Powers of Franchising Director to enter into agreement with the Board, etc.—
'() (1)The Franchising Director may enter into agreements with the Board or any wholly owned subsidiary of the Board for the provision by the Board or subsidiary of any railway passenger services which are not provided under a franchise agreement.
(2) Any sums required by the Board by virtue of this section shall be paid by the Secretary of State to the Board out of money provided by Parliament.'.

Mr. MacGregor: The purpose of the new clause is to put beyond doubt the ability of the franchising director to

enter into agreements with the BR board or its wholly owned subsidiaries. As the House will recognise, this covers the period while franchising is being introduced, where the franchising director is to assume responsibility for payment of all subsidy in respect of passenger services to the board and to franchisees. The measure covers the BR board and its wholly owned subsidiaries because the franchising director's contracts may be directly with the shadow franchise operating units as they are formed rather than globally with the board. The new clause is designed to clarify that.
The new clause also enables me to say a word or two about the shadow franchise operating units. Earlier this afternoon I answered a question about the way in which we suggest that the rest of BR's passenger services should be set up as franchising units for ultimate franchising. Copies of the answer and of the document giving the breakdown of the different franchise units are now in the Vote Office.

Mr. Prescott: I hope that the right hon. Gentleman will accept that we are continually being fed information just minutes before debates take place. It is impossible to debate these matters properly when we are handed five or six pages just before a debate—and this comes on top of today's other statement about franchising. There is another document relating to the exemptions, to which the Secretary of State may refer today.

Mr. MacGregor: Tomorrow.

Mr. Prescott: Even so, the right hon. Gentleman is creating real difficulties, and I hope that he will bear that in mind when he explains those documents. I was given some indication of the document to which the Secretary of State is now referring at 11 o'clock, and received it a little later than it would have been available to most right hon. and hon. Members, in the Library. We should be grateful for some explanation now.

Mr. MacGregor: That document does not affect decisions relating to new clause 16, so therefore it was not essential to produce it today. In fact, we could have delayed it for a considerable time. The exemptions document will be relevant to debates tomorrow.
The franchise proposals are to allow BR to start thinking about the restructuring of the remaining franchise units and to enable people more widely to see how we propose the breakdown. The document was not required for tonight's debate, but I thought that it would be convenient to mention it—since we are discussing shadow franchise operating units.
On Second Reading, I announced the first seven franchise units and British Rail is currently restructuring their management, operation and financial accounting. Those seven will be among the first to be franchised—one or two of them, we hope, later next year. It is important for BR to move ahead with those so that operational experience may be gained and the units can be set up with a track record under the new arrangements well before the franchising director puts those franchises out to tender. In that way, applicants will have some financial and other basis on which to make their bids.
The designation of the groupings that I published today is not a complete blueprint. There are proposals for 25 franchise units and we think that it will probably work out


like that. However, the designation is incomplete for two reasons. For some parts of the network—InterCity cross-country services, Regional Railways long-distance inter-urban services, and the central region of Regional Railways—I have not yet taken decisions as to how they should best be packaged for franchising. They will be reviewed over the next few months.
Also, the final form of franchises will be determined by the franchising director, who will want—as we have emphasised throughout—to take a view of the market at the time and to respond to market indications. In some cases, the director may want the franchises to be handled differently. So the designation is not a blueprint, but an indication of how things are likely to end up—and the basis on which British Rail will restructure. It is substantially the plan for transferring the whole passenger network to franchises.
As I said, the network will be divided into 25 businesses, but the crucial point is that, by and large, we are basing them on existing British Rail profit centres. That has a number of advantages for BR in restructuring and for management-employee buy-outs—which we are keen to encourage and for which we are providing financial assistance—which will more readily recognise most of the franchise units. That arrangement is also much in line with the recommendations in the Transport Select Committee's final report. We took note of that Committee's views and that is another example of identity of thinking. We were working on the same lines, leading to the announcement.
Some units, however, do not follow the profit centres exactly. As 25 are announced and there are only 19 profit centres, it is clear that there are some splits. I have already announced that one is the Isle of Wight. That split is sensible, because the local community has long wanted to run its own railway, and it is a discrete unit. Others are based partly on responses to the original consultation document and partly on our belief that one can produce smaller but viable units that make perfectly good franchising sense.
That designation is now available to the House and to the wider public and I hope that it will prove helpful as a further development of our proposals in the gradual evolution of the reforms for British Rail.
As to new clause 16, it is our policy that the franchising director should be responsible for paying all subsidy in respect of passenger rail services, excluding payments made by the PTEs. While franchising is being introduced, that will mean the director making payments both to franchisees where franchises have been granted and to the BR board where they have not. As the new clauses indicates, he may also enter into agreements directly with the operating subsidiaries that BR will form to run the services in preparation for franchising—the shadow franchises.
We think that there is a clear case for making the franchising director responsible for paying all support in respect of passenger railway services, excluding that paid by PTEs from April 1994, but including payments to franchisees and to BR while it is still running passenger services. I therefore invite the House to reject new clause 27.
New clause 16 will make for clear financial management. Franchises will commence throughout the

year—they will not all start at the beginning of the financial year and therefore they will not all be granted to commence on 1 April. It therefore makes sense for one person—the franchising director—to be responsible for making the necessary accounting arrangements, to switch subsidy between BR and franchisees in-year. If that were not done, there would have to be some shift of subsidy between whoever, under any alternative arrangements, makes the subsidy payments to BR and the franchising director, who would pay subsidies to franchisees.
There would be further transitional difficulties. If there were two separate pools of subsidies to passenger services, as new clause 27 indicates, their size would have to be settled in the annual public expenditure round—which would be announced in the autumn statement in November but almost certainly settled before then. If new franchises were to operate in the next financial year in question—from 1 April, say—they would not actually be settled until well after the autumn statement. There would then need to be further transfers. In terms of clear financial management, it makes sense to have subsidies allocated by one person.

Mr. Prescott: Presumably the moneys paid to the franchise director—however they may be apportioned between British Rail operations, shadow operations, and existing franchise operations—will still be seen as moneys paid from the public purse. So they will still be affected by anything that happens in the public expenditure round.

Mr. MacGregor: The hon. Gentleman is absolutely right. Those moneys would not only be affected by the public expenditure round but directly settled and decided in the annual public expenditure round in the normal way —because it would be subsidy direct from the taxpayer. Moreover; it is important to maintain public accountability.
Another advantage of adopting our approach is that it would establish a system under which, from the outset, the roles and responsibilities of the various players will be clear. The Secretary of State will he responsible for the total size of the budget for supporting passenger railway services, while the franchising director would be responsible for spending that budget in a way that will achieve his objectives and obtain good value for money.
The third reason for adopting our proposal and not new clause 27 is that it will assist the process of shadow running. Before a service is franchised, it will be run as a shadow franchise by British Rail, which will form a discrete subsidiary for each proposed franchise to run the services in question. Shadow running will generate information on both the operation and its costs. That information will enable the franchising director to take final decisions on the franchise to be offered to bidders, as defined in the invitation to tender, and on the value for money offered by bids, judged against the cost of British Rail continuing to run the service.
To channel the subsidy through the franchising director will, I believe, allow him to enter into agreements not just with the British Railways Board but directly with the British Rail subsidiaries. That has some advantages, which I think are important.
That brings me almost to the end of what I want to say in what I hope will be a short debate. The hon. Member for Kingston upon Hull, East wants, in new clause 27, grants to continue to be provided to British Rail by the Secretary


of State. That means that the cost of supporting rail services would remain hidden within a vast block grant. For some reason, the Opposition do not trust the franchising director's ability to make payments to British Rail, or perhaps they are unhappy about the transparency that the new arrangements will bring. I can think of no other reason why they should want to delay the point at which the franchising director becomes responsible for the total budget for supporting passenger railway services. As I have already said, I see clear advantages in going down the route that we recommend. Therefore, I commend new clause 16 to the House and invite it to reject new clause 27.

Mr. Prescott: The Secretary of State stuck closely to his notes, but these matters are still under discussion and late decisions could be made. As he explained, new clause 16 gives all the resources to the franchising director, who will receive them, presumably, from the Secretary of State for Transport who will negotiate them with the Treasury. The difference between the two new clauses is that we have chosen to identify that section that he has already said is a candidate for franchising. It covers seven areas. Today, the Secretary of State identified another 18. Those 25 areas account for practically the whole of the railway system. The exception that he is still considering is the Isle of Wight, and perhaps another area.
The Secretary of State said today that he has now identified all the areas that are likely to make up the character of future franchises. Managements can now look at the railway system and identify those areas. They account for the greater part of the railway system that the Secretary of State—presumably after discussion with the franchising director—thinks will provide a commercial railway, or one that will be available for bids under the franchise arrangments.
The first seven are probably more attractive than the other 18 that have been announced today. Perhaps one should compare the InterCity east coast main line with the strategic route along the west coast main line. Those two main lines face completly different problems. A common feature of both lines is that both run from London to Scotland, with one going up the east coast and the other up the west coast, but that is where the similarity ends. There has been considerable investment in the track and rolling stock and in the electification of the east coat main line. However, investment is desperately needed on the west coast main line. About £1 billion of investment is needed to modernise the line from London up the west coast to Scotland. It is at this point that the differences begin to emerge.
The Secretary of State says that he considers that these lines are likely to be candidates for franchising. If somebody said to him, '"I'm interested in the west coast main line, but I want to go only as far as Manchester and I don't want to operate up to Scotland," I wonder what his reaction would be? People fear that that is where the west coast main line will end and that the route to Scotland will be by means of the east coast main line.
Can the Secretary of State guarantee that the InterCity network route to Glasgow will continue and that a through service will be retained from London up the north-west coast to Glasgow? That question arises from the implication of his announcement. InterCity is, effectively, finished. There will no longer be a corporate body, InterCity. All the argument about who will get the InterCity logo is finished. None of these lines could claim

it. I suppose they could claim it to a certain extent, but a corporate identity, with one body providing a connection between all our main cities, will be removed. Those services will be provided by individual operators bidding for the franchises for about 25 services.
7.45 pm
I presume that the Secretary of State believes that those are the possibilities, but the services provided will be determined by the people who make the bids and by whether they receive sufficient subsidies from the Government to maintain them. Not all those services can be described as cherry-picked lines that will provide profits. The east coast main line makes a profit, which is estimated to be about £70 million. We should prefer the Secretary of State to have a global amount with which to provide a network service, because of the issue and principle of cross-subsidy.
I have listened to transport debates ever since I became a Member of Parliament 20 or so years ago. What characterises the difference between the two sides is the cross-subsidy factor. Many Conservative Members say that cross-subsidy undermines competition. Anybody who knows anything about transport, whether it be public or private transport, recognises that peak-time services are subsidised in one form or another. Under the InterCity network concept, it is recognised that some areas are less profitable than others and that a network service must be provided. A network service means that communities throughout the country can be assured of the maintenance of a railway network.
Let me give an example. My Hull constituency is tagged on to the InterCity network. There are only two services, one each way. I have no doubt that some people who run InterCity would like to lop off the InterCity service to Hull, because the part of the network that runs between Doncaster and Hull is probably not as profitable to them as it would be if they were able to run it directly from York to London. If it takes an hour for a complete set to be diverted from Doncaster to Hull and an hour for it to return to Doncaster, that amounts to one leg of the journey up to York. If it is thought that more money can be earned by providing a frequent service, the commercial ethos, the desire to maximise profit, will undermine the network requirement for a connection to Hull.
The Secretary of State will probably tell me that it will still be possible to maintain a service, that the franchising director will look at the old pacer train, or one of the new regional trains, and say, "Look, you can still get to Hull in the same time as the InterCity takes." But that will not be a through service. When travelling from one city to another, most people like to do the journey in one haul. They do not like having to change trains.
If we want to encourage people to get out of their cars and travel on public transport—to take the Hull example again—people will stay on the motorway to get to London instead of going by public transport, if there is no through service. The lack of a through service will lead to people being discouraged from using public transport. That is true of many other areas besides Hull. InterCity has cut off Cleveland, Shrewsbury and Blackpool. Substantial communities such as those are entitled to some form of network service to London, although perhaps not so frequent a service as the services to York or to our other main cities. At least one through service should be provided.
The provision of through services will not, however, be provided by the market. The market will determine what is the maximum revenue and the maximum profit. I cite as examples the east coast and the west coast main lines.
If the franchising operator gets the profits from our £500 million investment in the east coast main line, the £70 million will not be used to reinvest in the west coast line but will go to those operating the franchise. It will be profit for shareholders or those who have invested, and we shall presumably have to pay a considerable sum to whoever takes over the west coast main line.
The concept of cross-subsidisation is at the heart of a good transport policy. If we want to maintain that principle, it is critical that we get people out of their cars and on to the trains. I understand that the Secretary of State has found another solution—charge people to use the roads. On Wednesday, we shall perhaps hear more about road pricing and tolls and making it so damned expensive for cars that people will have to use the trains. That is one way of forcing people into the hands of those who will make money out of the syatem, but it is not the best or most rational way of dealing with the environmental and congestion problems.
Our approach to the Bill characterises our approach to transport in general. It is not surprising that we find the franchising process outlined in the Bill unacceptable for transport and environmental reasons and the reduction of congestion. We hear what the Secretary of State says, but we dispute and reject it. I should have thought that the process runs counter to the public service obligation which was originally introduced by a Labour Government.
The aim of the PSO is to recognise the need for a social railway system and to tell the management that we know it cannot make a profit but we shall pay because the community desires to maintain a network of 11,000 miles. That was the idea behind the PSO. It was called a PSO when we entered into the European agreement for the payment of subsidies. We entered into a social contract and agreed to pay a contribution to the running of a social railway.
However, we always specified that InterCity was different. We said that it was not entitled to a subsidy, but the Government are now going to pay to InterCity subsidies that they have not paid for a number of years. They always took the view that InterCity was not to be regarded as part of the social railway. The Secretary of State now proposes to bring InterCity into that category and, along with it, the freight system which we shall debate later. We are now to have a social freight service. I presume that another factor to be taken into account is that it is the Secretary of State who will govern the finances for the social railway. We shall not be absolved from responsibility but will presumably have to get the money and judge where it should be used to make up the difference in the track costs under the social freight concept which he has just announced.
The Secretary of State is introducing even greater subsidies without a guarantee for the network. I mentioned InterCity lines such as the west cost line which, because of the need for capital and massive maintenance costs, are not profitable. Would it not be better for the Secretary of State to cross-subsidise the whole system, issue the money in one payment and tell InterCity that he wants it to run a network service? He cannot do that if it is divided among different operators. That is the craziness of the system on which he has embarked.
Another criticism is that not only is the Secretary of State moving away from the PSO concept identified in the European agreement but he is doing something else that is causing considerable concern, as highlighted in our safety inquiries. Managers are obsessed with the organisation of the railway, not with how to produce a new, good or even a safe railway. They spend all their time jockeying to see what board they can get on and what they can do about their wages and conditions. Very little time is spent trying to produce the best possible railway with inadequate finances.
The Clapham inquiry warned us that so much time is being taken up by management concerns that the commercial ethos and the pursuit of profit are beginning to undermine the very safety of the railway. We were warned not to allow that to continue, but the Secretary of State's announcement is a signal to all British Rail managers to stand by to make a few bob because British Rail is finished and there will be no social railway system and no subsidised or non-subsidised railway. He is making it clear that the whole system is up for grabs, but he knows that, even if he wished it, that will not happen this century.
Some of the system may be gone. The Secretary of State may wave a few flags—like the Minister for Public Transport, who raised the flag on private organisations such as Stagecoach, which did not last six months—and say, "I launch this new privatised service." However, as the track will belong to someone else and, under the leasing arrangements, the assets will belong to another authority, we shall merely have caught people to manage the system. As Sir Peter Parker pointed out in his article today, they will not control anything because we shall merely be buying management skills, which will not make it difficult for us to bring the system back into public accountability, to which we are committed.
The process will not improve the railway system one jot, but will take the managers' minds off reality. The only way to maintain the network and the safety of the system is to make it clear, as we do in new clause 27, that, in the areas not passed to franchise operation, in the maintenance of a social network and in compliance with the European arrangements, the money should be paid for network provision to the remaining non-franchised parts of the service. That should he the Secretary of State's responsibility. If the right hon. Gentleman passes it wholly to the franchising director who is obliged to encourage as many private operators as possible, will there not be a danger that so much money will be given to private operators—as the Government are pressing him to do—that he will have no money left for the less profitable parts of the system?
It is true that the Secretary of State has now made it clear that the announcements that are made in the public expenditure round for the PSO payment—let us say that it is £1 billion, as it has doubled in the past few years—will no longer be governed by that particular year. When the legislation was first introduced, it was agreed that the figure could not rise above that announced in the public expenditure round. By removing that provision, the Secretary of State has made it clear that it is open ended. Open ended can mean many things but, in the Treasury's present frame of mind, it does not mean more money. It means that money will be squeezed. Does anyone believe that the railways will receive more subsidy against the background of a £50 billion public borrowing deficit? If it is left to the franchising director to decide, will it not mean


that the least profitable and most socially necessary railways will suffer—the rural stations and the very areas for which we want to maintain 11,000 miles of track?
The essential point is that, according to the PSC), which we accepted under the European arrangement, we agreed not to reduce services but to provide sufficient money to maintain the system at its existing level, which was always measured to be 10,000 or 11,000 miles. How will that be maintained? How are we to observe the quality of service that we are obliged to provide under the European agreement? Will it be the franchising director's responsibility or the Secretary of State's?
The Secretary of State is the only one who signs the agreement and is responsible for the Government's policy. The franchising director is not independent—as we know from the legislation, at end of the day he is accountable to the Secretary of State. Will the money be provided to meet the obligation? We want the Secretary of State to be answerable. We do not want him telling the House that the franchising director had told him that he had enough money but that people were not efficient or that too many people were employed and paid too much overtime.
The Secretary of State has avoided giving answers about British Rail many times. He has caused more parliamentary questions to be asked than anyone else and does not come to the Dispatch Box very often to explain what he is doing. It is rare for us to get him into television studios, never mind the House of Commons. However, in spite of that and in spite of the nature of the present Secretary of State, we want him to be answerable.
We must rely on the fact that the PSO payment is largely about maintaining a social railway. Privatisation is about making profit for the private sector. We want the money to be retained by the Secretary of State for the maintenance of a public network. He should be answerable to the House, which is the purpose of new clause 27.

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Mr. Peter Snape: Listening to the Secretary of State is an enormously depressing experience. Anyone who has sat through railway debates over the years, as many of us have, must be struck by the sense that there is little new under the sun. There is nothing at all new about successive Secretaries of State, except the personality of the person at the Dispatch Box. Secretaries of State come and go. I read in the newspapers that this one is not long for us, and that he has other fish to fry and other jobs in mind. No doubt his successor will trot out the same fallacies that the right hon. Gentleman has given us this afternoon.
The Railways Act 1974, to which my hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott) referred, came about in part because of the inexact nature of planning subsidies to the railways on a line-by-line basis. Before the 1974 Act, the subsidy paid to a particular line was based on an annual and occasionally twice-yearly passenger count on that line. It was, as I have said, a fairly inexact science, and one that most people connected with the railway industry were glad to see disappear following the passage of the 1974 Act. Therefore, to talk about returning to that method, in the way that the Secretary of State has done today, is enormously depressing.
My hon. Friend the Member for Kingston upon Hull, East asked the Secretary of State about the provisions of

the 1974 Act and whether they would still apply if and when the Bill became law. Will there be some guarantee from the Secretary of State—not from someone whom he has appointed as franchising director—about the size of the network? Is it still the Government's intention that the 11,000 miles, to which my hon. Friend referred, should remain in situ, to be the railway of the future, as it has been over the past 20 years or so?
Given the view expressed by the Secretary of State and the Conservative party's general ideological view that the private sector is inherently good and the public sector inherently bad, what guarantee can the Secretary of State give us that any moneys allocated through the person whom he appoints will be fairly divided and will not go largely to the new private franchises at the expense of the rump railway operating in the public sector, at least until the unlikely day when the right hon. Gentleman can find someone to take it off our hands? What guarantee can he give us that the railways still operated by British Rail, albeit in the short term as the Government intend, will be properly treated in the allocation of funds?
Ministers trot out the phrase "value for money" all the time. All of us, even Conservative Members who support the Bill, know full well that franchises will be awarded to the lowest bidder. In those circumstances, there is no real guarantee of value for money. If the franchisee runs half a dozen trains during a day at a time that suits him or her, he or she will be able to put in a far lower bid than someone who wants to run a comprehensive day and evening service. Without some guarantee—[Interruption.] The hon. Member for Worcester (Mr. Luff) says something incoherent. If he has a point to make, I shall be delighted to give way.

Mr. Peter Luff: The hon. Gentleman is obviously unaware that potential franchisees will be invited to bid for specified timetables. They will not be able to pick and choose which services they deliver.

Mr. Snape: Although the hon. Gentleman has not been here long, his naivety does him no credit. Does he seriously think that there is any long-term guarantee of railway services on that basis?

Mr. Luff: Yes.

Mr. Snape: The hon. Gentleman says, "Yes." He and I will debate these matters in a television studio at the weekend. I am looking forward to that immensely. As my hon. Friend the Member for Kingston upon Hull, East says, it is no wonder that the Secretary of State will not appear in a television studio. None of us is surprised if he sends along people such as the hon. Member for Worcester.
No real value-for-money judgment can be made about the proposals. The Secretary of State and his more emollient colleague, the Minister for Public Transport, have given us no guarantees. I hope that before the House comes to a conclusion on the new clause, guarantees are not only sought, but given.

Mr. Michael Stephen: I do not subscribe to the view that the railway is badly managed. I am the holder of an Industry and Parliament Trust fellowship and in the short time in which I have held that fellowship I have met many senior and middle-level managers of British Rail. I have been impressed by the people whom I have met; they are excellent, dedicated people. However, no one in the


country, even in the railway industry itself, believes that there is no scope for improvement. I have no difficulty, therefore, with the principle of introducing private sector management techniques into the railway industry. The people who work in the industry have no difficulty with that principle either.
I also have no difficulty with the desire to introduce private sector capital into the railway industry. The trouble with publicly funded industries, as we saw with water and electricity, is that there is only one source of money—the Treasury. The Treasury usually has only one word in its vocabulary, which is no. Especially in the case of industries such as the railways, one is always told by the Treasury that hospitals, schools and other areas have a far greater priority.
I have difficulty, however, with the implementation of the process. The privatisation of the railway industry proposed in the Bill is a very ambitious project and there is no doubt that there will be teething troubles. I ask my right hon. Friend, therefore, for an assurance that the privatisation process will be conducted on a step-by-step basis and that we shall learn from the errors that will inevitably be shown up when implementation begins. I ask my right hon. Friend for an assurance that we shall not rush headlong into anything.

Mr. MacGregor: By leave of the House, Mr. Deputy Speaker, I shall respond quickly to the points raised. The reason why the hon. Member for Kingston upon Hull, East and I were yesterday in the same studio, but discussing the matter separately, is that in the short time allotted to us we should have been talking very fast at each other. It was probably more productive for the distinguished interviewer to bring out separately different aspects of our policy. The hon. Gentleman knows very well that we have had many debates on these matters and I am sure that we shall have many more on transport matters for a long time to come.
My hon. Friend the Member for Shoreham (Mr. Stephen) made two good points, with which I entirely agree, about the present BR management. I know that many BR managers see great opportunities to produce better passenger services through the proposed systems. My hon. Friend also made a good point about private capital.
I have always emphasised that this is an evolutionary reform of the railways in a private sector direction; it is not revolutionary reform and will not happen all at once. I pray in aid a leader in the Financial Times today which my hon. Friend may have seen. It suggests that we should go faster than we are. It says:
All the private sector is being asked to do is to bid for franchises to operate passenger services on British Rail's behalf. But even this small step brings the prospect of significant benefits—worthwhile improvements in productivity, a management motivated by financial rewards, and, it is to be hoped, the beginning of private sector investment in rolling stock. And because the chosen structure sensibly avoids a 'big bang' approach in favour of a piecemeal allocation of franchises over a period of years, there will be every opportunity to learn from experience as privatisation progresses.

Mr. Bob Cryer: At the expense of passengers.

Mr. MacGregor: Certainly not at the expense of passengers. I hope that that meets my hon. Friend's point. We shall benefit all the way through from better and better handling of the whole system.

Mr. Brian Wilson: This is the second time that the Secretary of State has referred to this morning's Financial Times editorial. In the interest of balance, every time that he quotes from today's Financial Times editorial, will he also quote from last week's editorial in The Daily Telegraph, or is The Daily Telegraph no longer an acceptable journal of opinion for the Conservative party?

Mr. MacGregor: The reason why I am quoting from the Financial Times is that an Opposition Member raised its editorial. I simply thought that the Financial Times put the point that my hon. Friend the Member for Shoreham made extremely well.
The hon. Member for Kingston upon Hull, East referred to Glasgow and I can give him a clear affirmative on that point for two reasons. First, British Rail has no plans to discontinue any services beyond Preston on the west coast main line. Secondly, as the hon. Gentleman will know, the invitation to tender will be based on the network as it exists immediately before that invitation.
That is very clear. The hon. Member for Kingston upon Hull, East will see that that is the case from the chart that has been produced today for that franchise unit. I can see that there are real merits in having competition under our franchising system between individual operators and between the west coast and east coast main lines.
The hon. Member for Kingston upon Hull, East referred to cross-subsidies. Under the system that we are proposing, where a line like the east coast main line has received substantial investment and where bidders are therefore likely to pay a premium in return from the profits which, as the hon. Gentleman indicated, are available on that line, that premium will be able to be offset—in effect, it will be taken into the calculation—against the total amount of subsidy that will be paid out in the bids for other franchises such as for the west coast main line where, I readily acknowledge, further investment on a significant scale will be required over the years.
That brings me to the next and very important point about PSO grants. We are continuing the subsidies. We believe that we have found a more effective way, in operational terms in respect of getting value for money, and in transparency, by allocating the subsidies in the way that we propose. However, the subsidies will continue.
The hon. Member for Kingston upon Hull, East also referred to inadequate finances, although he conceded that the current level of PSO is twice the level of recent years. He will be aware that the currrent level is much higher than for a very long time—[Interruption.] That was the hon. Gentleman's phrase. That is also why investment is at such a high level, including £500 million which has been spent on safety in the past three years.

Mr. Wilson: Will the Secretary of State give way?

Mr. MacGregor: No, I must make progress.
The hon. Member for Kingston upon Hull, East will also be aware that we have given clear commitments in relation to safety on the basis of the Health and Safety Executive report. This debate comes down to whether the subsidies are allocated through two different routes or


through one. I have already said why I believe that it is right to proceed via the franchising director. I do not want to repeat the arguments, but that is why I commend new clause 16 and urge the House to reject the other new clause.

Mr. Wilson: If the Secretary of State had given way a moment ago, I would not have needed to intervene now as
I wish to contribute literally three sentences. The PSO grant has been cut by 23 per cent. over last year's figure. Even according to the somewhat short-term thinking of the Conservative party these days, I do not believe that that counts as a very long time.

Question put and agreed to.

Clause read a Second time, and added to the Bill.

Orders of the Day — New clause 4

DUTY OF CERTAIN PERSONS TO FURNISH INFORMATION TO THE FRANCHISING DIRECTOR ON REQUEST

'.—(1) Any of the following persons, that is to say—
(a) the Board,
(b) any wholly owned subsidiary of the Board, or
(c) any person who is the holder of a network licence or a station licence,
shall be under a duty to furnish to the Franchising Director in such form and manner as he may by notice request such information as he may so request, being information which the Franchising Director considers necessary for the purpose of facilitating the performance of any function of his under this Part.

(2) A request under subsection (1) above must be complied with within such time (being not less than 28 days from the making of the request) as may be specified in the request.

(3) If any such request is not complied with, the Franchising Director may serve a notice under subsection (4) below on the person from whom the information was requested under subsection (1) above.

(4) A notice under this subsection is a notice signed by the Franchising Director and—
(a) requiring the person on whom it is served to produce, at a time and place specified in the notice, to the Franchising Director or to any person appointed by the Franchising Director for the purpose, any documents which are specified or described in the notice and are in that person's custody or under his control; or
(b) requiring that person to furnish, at a time and place and in the form and manner specified in the notice, to the Franchising Director such information as may be specified or described in the notice.

(5) No person shall be required under this section to produce any documents which he could not be compelled to produce in civil proceedings in the court or, in complying with any requirement for the furnishing of information, to give any information which he could not be compelled to give in evidence in any such proceedings.

(6) A person who without reasonable excuse fails to do anything required of him by notice under subsection (4) above is guilty of an offence and shall be liable on summary conviction to a fine not exceeding level 5 on the standard scale.

(7) A person who intentionally alters, suppresses or destroys any document which he has been required by any notice under subsection (4) above to produce is guilty of an offence and shall be liable—
(a) on summary conviction, to a fine not exceeding the statutory maximum;
(b) on conviction on indictment, to a fine.

(8) If a person makes default in complying with a notice under subsection (4) above, the court may, on the application

of the Franchising Director, make such order as the court thinks fit for requiring the default to be made good; and any such order may provide that all the costs or expenses of and incidental to the application shall be borne by the person in default or by any officers of a company or other association who are responsible for its default.

(9) Any reference in this section to the production of a document includes a reference to the production of a legible and intelligible copy of information recorded otherwise than in legible form; and the reference to suppressing a document includes a reference to destroying the means of reproducing information recorded otherwise than in legible form.

(10) In this section "the court" means the High Court, in relation to England and Wales, and the Court of Session, in relation to Scotland.'—[Mr. Freeman.]

Brought up, and read the First time.

Mr. Freeman: I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker: With this it will be convenient to discuss the following: Government new clause 13—

Transfers of franchise assets and shares.

Government new clause 23—Powers of the Franchising Director to make transfer schemes.

Amendment (a) to new clause 23, in line 7, at end insert—
', or
(d) the Board, or any wholly owned subsidiary of the Board'.

Amendment No. 237, in clause 5, page 6, line 9, at end insert—
'(c) to ensure that the levels of fares charged or to be charged under a franchise agreement are reasonable to passengers'.

Government amendments Nos. 110 to 112, 153, 162, 13, 166, 164, 165, 168 to 172, 174, 179, 177, 180 to 182, 184, 72, 80, 85 to 88, and 24 to 28.

Mr. Freeman: I will speak to new clause 4 and the other Government new clauses of which there are a great number. I will explain relatively simply what they are intended to do. They all relate to the powers of the franchising director.
Government new clauses 4 and 13 replace clause 68. They improve the drafting of the Bill. They extend the powers of the franchising director in obtaining information to a much wider range of bodies. At the moment, clause 68 specifically gives the franchising director power to obtain information from BR to prepare information for a bid for a franchise.
New clauses 4 and 13 extend the powers of the franchising director to obtain information from Railtrack and from station licensees to prepare the necessary information to advertise to the private sector what is on offer in terms of a franchise. That will enable the franchising director to prepare proper information. There will certainly be sufficient time for the private sector to bid for the franchise.
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Clause 24 is replaced by Government new clauses 13 and 23. The purpose of those new clauses is to give the franchising director powers of designation, protection and transfer of what are called designated franchise assets. The new clauses provide, in the Government's judgment, a clearer regime. In particular, for the first time, the franchising director will be able to designate leases of rolling stock. As those are clearly rights of the operating companies and assets which do not belong to the


franchisee or potential franchisee, the franchising director will have the power to control the continued use of leased rolling stock on a particular line.
An amendment to which we shall come later should be read in conjunction with that new power. It gives the franchising director the right to roll forward leased rolling stock from one franchise to another. The purpose of that amendment is to enable the leasing industry to have sufficient security in writing long-term leases, even though a particular franchise might be for a more limited period.
Under those Government new clauses, the franchising director will be able to designate assets, rights and liabilities. The new clauses also provide for designation of those franchise assets by agreement with the franchisee. We believe that that is important. They will be protected under the franchise and there are provisions in relation to assets, removed at the end of a franchise period from one franchisee and passed to the next, for appropriate values to be paid to the franchisee at the conclusion of his franchise. There is also a provision which places on a statutory footing the obligation of the franchisee not to encumber certain assets.
I hope that that is a concise introduction to the amendments.

Mr. Cryer: Before the Minister concludes, will he describe the circumstances in which the franchising director is given powers in new clause 4 to impose criminal penalties, albeit through the courts? The power will apply if a person fails to provide adequate notice or if he or she alters documents. Does not that suggest that the proposed system is fraught with legal difficulties, arguments and deceit? New clause 4 provides for the standard of production in civil proceedings and it adds on criminal offences. Does not that envisage serious difficulties in the work of the franchising director?

Mr. Freeman: I do not think so. The hon. Gentleman will realise that the franchising director is established as a non-ministerial Government Department, answerable to the House through my right hon. Friend the Secretary of State for Transport. Therefore, he constitutes a public body. It his duty to let by franchise the responsibility for running passenger rail services. Therefore, there should be some compulsion available to him to obtain information. We are not simply talking about BR or Railtrack—and it is intended that Railtrack shall be a Government-owned company. There may also be private providers of infrastructure and, for example, private sector station licensees.
If the franchising director needs to obtain information to enable him to relet a franchise—or to let one initially —it should be within his powers to obtain that information. That is the reason for the sanctions in Government new clause 4, to which the hon. Member for Bradford, South (Mr. Cryer) has drawn the attention of the House. He was right to do so. That does not imply that there is any web of deceit or malevolence among those who seek to provide station services, network services or franchised passenger rolling stock services. It gives the franchising director the essential power that he needs.
I note that the group of amendments includes amendment (a) to new clause 23. I am sure we shall hear a speech on it shortly from the Liberal Democrat Benches. It is important that the House should recognise that it is

not intended that British Rail should have any determinate length of responsibility for running franchise services once an initial franchise is let.
As I understand it—I look forward to responding in due course—amendment (a) to new clause 23 provides the power to transfer assets from the franchising director to British Rail for a period to run services if the franchising director decides that that is the best solution. I look forward to hearing the arguments. I shall argue that the franchising director will look to British Rail in certain circumstances. But the franchising director can and will make management arrangements with British Rail to provide the services. There is no need to give British Rail either a formal franchise or for there to be a formal arrangement between the franchising director and British Rail.

Mr. Wilson: We have here a preliminary skirmish on some of the issues that we will return to in more detail during tomorrow's debate. As the Minister said, these new clauses and amendments are to some extent technical. Some piquancy has been introduced to the group of amendments by the amendment tabled by the right hon. Member for Tonbridge and Mailing (Sir J. Stanley) on fares and the franchising director's role in that, and also of course by the hon. Member for, North Devon (Mr. Harvey) who has raised the subject of British Rail's right to do anything after the legislation is passed, if it is passed in its present form.
The amendments also give rise to some discussion of the powers of the franchising director. I see the director as a figure who will be of great convenience to the Government, in that responsibility for everything that happens on the railways will then be transferred to him. The Government are looking for a figure of whom they can say, "It is nothing to do with us. This is the franchising director's job. It is he who has made the decisions and the idea of holding Ministers responsible really is quite ridiculous."
I can tell the Minister that the Government will not get away with that. The creation of the structure is the responsibility of the Government. When things start to go wrong—as they certainly will for the reasons that my hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott) outlined in the previous debate and for the reasons that we can see in this debate—I assure him that it will be political responsibility that is carried. It will not be the franchising director who does not have the money to sustain the system. It will not be the franchising director's fault when franchises fail and such measures have to be brought into play.
There are things that we can welcome. If the legislation goes ahead, clearly it would create additional difficulties if every time that a franchisee changed, it was all change for rolling stock and everything else. As the principle of leasing, which is a far more rational and intelligent form of private sector involvement than anything that we have heard from the Government, was first suggested by the Opposition, it would be illogical of us to oppose the idea that leasing should be made possible by a recognition that the leased rolling stock would carry over from one franchise period to the other. However, that does not acknowledge the sense of franchise periods. That is a separate story.
We support leasing. It is a sensible way of creating investment in the railways. It is a sensible way of giving


work to the railway manufacturing industries. Of course, leasing could have been introduced years ago. It is not in the least dependent on anything else in the Bill. It is remarkable that the Government took so long to come round to our way of thinking.
The rest of the new clauses and amendments are not controversial. We support the amendment tabled by the right hon. Member for Tonbridge and Mailing. We also support the Liberal Democrat amendment, on which we shall vote later. The right hon. Member for Tonbridge and Mailing and his colleagues suggest that the franchise director should have a responsibility
to ensure that the levels of fares charged or to be charged under a franchise agreement are reasonable to passengers".
I have no wish to pre-empt what the hon. Gentleman intends to say, but if the Government do not accept the amendment as a signpost that many Conservative Members are extremely discontent with the Bill, they will not accept much else.
It is surely reasonable to expect the franchise director to have responsibility and take an interest in the level of fares charged by the operators. All the pressures in the Bill will be to force fares upwards. The financial regime which will be put in place will force fares upwards. The main pressure will come from the profit element, but the structure will depend largely on the level of subsidy. There is no guarantee that in future the subsidy will be maintained at its present rate. Indeed, we believe that a large part of the Government's operation is intended to reduce that level of subsidy, and hence the cost of the railways to the Government.
The Liberal Democrat amendment, which will also have our support, is straightforward. It raises the principle of involvement of British Rail in what happens after the legislation is passed, if indeed it is. The franchise director can apparently transfer assets to virtually anyone in Christendom except the people who at present run the railways. Here we see the Government's prejudice against British Rail. It is further confirmation that the purpose of the Bill is to squeeze British Rail out of existence. The Government intend to erode it steadily. Prejudice is the only word that I can use because it is difficult to see any rationale behind the Government's position.
The Minister's attitude to the Liberal Democrat amendment seems to confirm that anything which sustains or extends British Rail's role is anathema to Ministers. We shall deal with that approach in much more detail tomorrow. The tone of the Minister's remarks must be offensive to some Conservative Members. It will certainly be offensive to people in British Rail who work to make the system function as well as it does. The blinkered focus of so much of the legislation is that British Rail must be squeezed out of existence by whatever means possible.
Like the Minister, I hope that I can catch your eye later, Mr. Deputy Speaker. I give notice that we shall support the amendments. I look forward to much more discussion of the principles which underlie them as we proceed.

Sir Teddy Taylor: I wish to put four questions to the Minister. I think that they are relevant to the new clauses. I appreciate that many hon. Members wish to speak. New clause 4 says that any person shall furnish information. Does that information relate to nationality? I was astonished, as I know that you will be, Mr. Deputy Speaker, to hear that while foreign railway

companies such as the French or Belgian railway network will be permitted to put in a bid for the Fenchurch Street line, British Rail will not.
I find it unthinkable that British Rail might be able to tender for the Fenchurch Street line only by securing a French subsidiary company. I hope that the Minister will bear in mind our obligations under European Community law, and will ensure that no one is treated unfairly. I hope that he can assure us either that national railway companies will be able to put in a hid, or that they will not. I think he will accept that it would be rather unfair to the people of Southend, and rather alarming for them, if they were subject to control by a French company rather than by British Rail—for which they have a high regard, despite the dreadful service with which they are provided.
8.30 pm
My second point is fundamental. Can the Government assure us that, when the franchises and information are sought, the people—including hon. Members—will be able to see what is being asked for? I think that, if the franchising director decides that he wants the Fenchurch Street line to have two trains—perhaps on Wednesday, every second week—the people of Southend are entitled to have that information. I hope that the Minister will make it abundantly clear that, if the franchising director is looking for bids, the people will know what is being paid for. As he probably knows, there is a certain amount of suspicion about the whole business in some parts of the country.
Thirdly, can the Minister give an assurance that the franchising director will consult the respected rail passenger organisations in Southend and elsewhere? The Government now seem to be setting up quangos constantly. I remember a time when Conservatives used to complain about quangos, describing them as nasty, costly nonsenses created by socialist Governments. In fact, we have set up far more quangos than any socialist Government, and they are becoming more expensive and more bureaucratic. When I look around my own country —including a place called Chelmsford, which some hon. Members may have observed— I find that many people are employed by quangos, and that it costs a fortune. It is all very sad.
I have a high regard for the Minister, and I know that there is no way of preventing the Government from rushing to create a mass of new quangos. I hope, however, that he will at least assure us that the exciting new quango known as the franchising director will have an obligation to consult rail users' associations.
Finally, let me convey a simple request from Southend-on-Sea. Our rail system is wildly out of date. Let me pay a personal tribute to the Minister, along with my right hon. Friend the Member for Southend, West (Mr. Channon): he agreed to new signalling equipment for the line. It is only fair to point out that the signalling at Fenchurch Street station is older than I am: that shows that it is rather out of date. However, we have now been assured that something will be done—and we hope that it will, despite the problems facing the Treasury. My right hon. Friend and I—along with all the travellers of Southend—also hope that this exciting new arrangement will ensure the provision of new rolling stock on the Fenchurch Street line.
We respect the Minister. He has said things that we have found to be correct, which is rather unusual in


Ministers nowadays; he has forecast developments that have actually come about—which, again, is commendable and unusual. Given our trust in the Minister, based on what he has done for us in the past, we hope that he can answer the four points that I have made. If he can, it will greatly reassure the people of Southend, who have suffered a great deal and who hope that the Government's exciting new plan will limit their sufferings in the future.

Mr. Nick Harvey: The Minister anticipated that I would want to speak to amendment (a), and I intend to do so. The new clause strays further into the realm of BR's future involvement in the railways, which will clearly be a substantial matter for debate tomorrow.
Only a few minutes ago, we were considering Government new clause 16 and the principle of BR running services that are not franchised—that is, operating services before the creation of a franchise. I wonder why it should be so out of the question for us to discuss BR's involvement after the ending of a franchise. It strikes me as the height of absurdity that, under Government new clause 23(1)(b), the franchising director will apparently have to go to the lengths of setting up his own subsidiary company to run services where there will be no other franchise. As the hon. Member for Cunninghame, North (Mr. Wilson) pointed out, that rules out the obvious party to which the franchising director should turn in such circumstances—the only experienced operator in the land, British Rail.
The amendment would not set up a formal BR bidding process at the end of a private franchise. There would be no obligation to hand everything over to British Rail; that would simply be retained as an option, at the franchising director's discretion. The experience of London Buses is vaguely comparable to what we are discussing. In some cases, at the end of a private franchise, the service has reverted to London Buses.
I agree with the hon. Member for Cunninghame, North: the Government's proposals are based on ideology —on a dogmatic determination to squeeze BR out of existence. If, at the end of a franchise, it is decided that there will not be another franchise for some reason, and the franchising director contemplates handing over the service to BR—the Minister has conceded that that could be done on the basis of, for instance, a management agreement—it must be because something is wrong.
The fact that the existing franchisee is not coming back for more, or there is no queue of potential franchisees waiting to take over, suggests that the franchise is failing. In such circumstances, the option—the right—to hand the service to British Rail would be a valuable tool in the franchising director's armoury.
If, as has been suggested, that could be done simply through management agreements, why not write it into the new clause and enable the assets to be handed over? How, through a management agreement, can BR run a service without being given the franchise assets—the trains and everthing else on the line? How can any management agreement cover BR's ability to operate such a service if it is not given the tools with which to do so?
I admire the conviction with which the Government are planning ahead—burning the bridges behind them; doing without any safety mechanism to catch the pieces if the whole thing falls apart—but I am forced to doubt their

judgment. They are impressively buoyant in their approach to a scheme that is almost universally derided by those outside their ranks.
The Government believe that the introduction of the private sector through the franchising set-up that they anticipate will result in a reduction in the cost to the Exchequer; but many of us do not. They believe that a queue of interested parties is champing at the bit to take on these services; but many of us do not. They believe that the private sector whizz kids will come in, improving services and increasing revenue; again, many of us do not. The Minister himself has agreed that, if the private sector is unable to come in and increase the revenue, there will be a disaster. How right he is.
At present, none of us knows who is right. No one can say for certain whether the Government, in their buoyancy, conviction and optimism, are right, or whether the many others who have considered these matters and retain some scepticism are right. Let us just suppose that it is we who are right—we who are sceptical about the potential success of the scheme—and that franchises start to fail. If one private franchise fails, why should another on the same line and service succeed? What would happen if nobody came forward to take it over?
If the amount that the franchise director has to offer to try to tempt people in to save the day in those sorry circumstances is more than it would cost British Rail to run the service, the National Audit Office will probably take an interest in the matter, as it would amount to the squandering of public funds. It would be in the best interests of the Minister and the scheme if that fallback option and safety net could be continued. I sincerely believe that the Government are displaying pig-headed obstinacy and that the British Rail option should remain available to the franchise director.

Sir John Stanley (Tonbridge and Mailing): I wish to speak to amendment No. 237. Through you, Mr. Deputy Speaker, I should like to express my appreciation to Madam Speaker for selecting the amendment at a late stage. I believe that it is extremely important for the House to discuss the amendment, and Madam Speaker has done the House a service by enabling hon. Members to debate fares policy.
As the House may know, I expressed strong reservations on Second Reading about the effects on fares of my right hon. Friend the Secretary of State's British Rail privatisation proposals. My fears were based on a combination of three factors, which all appeared to me to show that a strong upward pressure on fares would be created. The first was that the private sector franchisees would certainly look for a significantly higher rate of return than is currently being obtained by British Rail and is being sought by the Treasury as a rate of return on capital by British Rail.
Secondly, there is no certainty about the level at which present subsidies will be continued for British Rail, particularly in relation to Network SouthEast. The Government have made a commitment that subsidies will continue, but have declined to say at what financial level. The subsidies might be cut by half, two thirds or three quarters, which would result in further upward pressure on fares. Thirdly, the Bill does not contain a specific provision to moderate the level of fares that can be set under the franchise proposals.
Since I expressed those concerns on Second Reading —concerns that were also expressed in other parts of the House and by a number of hon. Members—there has been remarkable agreement in the comments on the fare implications of the proposals. The House has had the benefit of the Select Committee report, which expressed a similar view.
Outside the House, there has been a host of reports by independent firms, consultancies, independent commentators, transport user groups, consumer interests, including the National Consumer Council, and major local authority associations such as the Association of District Councils, the Association of County Councils and the Association of Metropolitan Authorities. They have all come to the same conclusion: that the pressure on fares will tend to be upwards. Against that background, I urge my right hon. Friends on the Treasury Bench to give the most serious consideration to that substantial weight of opinion from all quarters on the proposals' likely fare implications.
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I tabled amendment No. 237 because, although the Bill has now reached its Report stage, there is still no sign of material moves by Ministers to allay my fears on the fares issue. I had hoped that, in Committee, the concerns that I had expressed on Second Reading would be at least partly met, but unhappily that is not so.
Since I spoke on Second Reading, there have been two policy announcements. At virtually the eleventh hour and 59th minute of the Second Reading debate, my hon. Friend the Minister for Public Transport popped into his wind-up speech a significant statement of policy. I believe that it appeared there for the first time, unless it had previously escaped me. He said:
We propose a cap on fares for those services which are a monopoly, and I can confirm that the commuting lines into London constitute a monopoly."—[Official Report, 2 February 1993; Vol. 218, c. 243.]
That constituted acceptance of the principle of a cap.
Tucked away in the voluminous documentation submitted to the Standing Committee was a paper entitled, "Draft Objectives of the Secretary of State for the Franchising Director". It contained two paragraphs with the arresting title of "Fare Levels", setting out the draft objectives. But, unfortunately, they contained nothing of great substance, other than stating that only on franchise services which enjoy significant market power—monopolies—could the franchise agreements limit price increases on fares. No such limits would apply on other lines.
To determine whether my right hon. Friend the Secretary of State could say anything more substantial about what he intended to do in relation to fares, I asked key questions about capping: at what level could the cap on fares be set and what would be the criteria for triggering the cap on fares where the franchisee had a monopoly? I also asked whether my right hon. Friend had any further information to supplement the thin information set out in the two paragraphs of the draft objectives to which I have referred. My hon. Friend the Minister replied:
Further work remains to be done in developing the draft guidance that I provided to the Standing Committee in relation to fares regulation and other matters."—[official Report, 5 May 1993; Vol. 224, c. 158.]
We are none the wiser about what is intended in the way of fare control.

Mr. Mark Wolfson: While I clearly welcome the fact that commuter lines into London are to be regarded as a monopoly, and will consequently be eligible for capping, does my right hon. Friend agree that there are many other cases all over the country in which, in railway terms, the franchisee will have a monopoly?

Sir John Stanley: I am grateful to my hon. Friend, who makes a significant point. In practice, it will be extremely difficult to ring-fence the capping principle on a geographical basis. I am sure that my right hon. Friend the Secretary of State and my hon. Friend the Minister will appreciate the force of what my hon. Friend the Member for Sevenoaks (Mr. Wolfson) has said.
On Second Reading, I said that I felt that I was being asked to sign a blank cheque on my constituents' cheque books for their travel-to-work costs—the second highest item of household expenditure in my constituency after food, runing at about £2,000 per year. The object of amendment No. 237 is to try to place an upper limit on the blank cheque by introducing the principle of reasonableness, inserting in clause 5 an additional statutory duty on the franchising director.
The House may find it interesting to look at the franchising director's existing statutory duties. In many ways, the first two duties are symptomatic of how the Bill is drafted, as they simply put clear obligations on the franchising director to do what the Secretary of State tells him. In other words, the franchising director will follow only the Secretary of State's objectives, guidelines and instructions. Indeed, he is a creature of the Secretary of State.
That is a perfectly reasonable principle, and I do not contest it. But that is where it ends—no further obligation whatever is placed on the franchising director, other than to do what the Secretary of State says. The purpose of the amendment is to introduce an additional statutory duty —the requirement that the level of fares set should be reasonable to passengers.
I anticipate two possible questions that may be asked with regard to it. The first is whether it is technically and legally satisfactory to base a duty on the principle of reasonableness. I submit that there are ample precedents in statute law, and that it is a familiar legal concept. Obviously, in considering the amendment, I and those associated with it considered other options, such as whether there was a possible formula that could be adopted. We concluded that, given the multiplicity of lines, the different financial patterns and the different social requirements, there was no formula that could conceivably make sense and that therefore the criterion of reasonableness was the best one to adopt.
The second question that I anticipate is whether such an amendment is necessary: is the point that I am making covered elsewhere in the Bill? If my hon. Friend the Minister seeks to draw attention, for example, to clause 4(1)(a), which refers to the statutory duties of the Secretary of State and the regulator, there is a statutory duty
to protect the interests of users of railway services
That statutory duty is not sufficient to deal with the specific issue of fares—it is an extremely generalised duty.
Indeed, from some standpoints, one could well argue in favour of a substantial increase in fares, possibly in the interests of users of rail services in certain circumstances —for example, if a major investment programme had to


take place. I do not believe that the statutory duty in clause 4 in any way provides an adequate answer to the question of protection in the area of fares.
My hon. Friend may seek to draw my attention to amendment No. 111. I appreciate that that amendment enables a franchising agreement to include provisions on fares, but their content is left wholly open and could amount to anything. Therefore, the specific legal point, the specific policy and the specific structure in law that is covered by my amendment is not in any way covered elsewhere in the legislation. If the amendment is accepted by the House—obviously, I hope that it will be—it will be the only specific wording in the legislation biting on fare levels.
The amendment could not be a wrecking amendment. It does not in any way seek to undermine the Government's proposals or stop franchising getting off the ground. It is based entirely on reasonableness.
I put it to my right hon. and hon. Friends on the Front Bench that the only conceivable basis for failing to accept such an amendment is that they wish to keep open the option of fare levels becoming unreasonable. I assume and hope that that is not what they wish to do. The amendment is modest, sensible and necessary, and I commend it to the House.

Mr. Snape: As my hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott) said, we must pay tribute to the Government for one thing—they have accepted the principle of rolling stock leasing. Before the last general election, they were resolutely against rolling stock leasing. Indeed, during the campaign and for several months after it, the Minister of State said—I do not recall whether it was in the House or outside—that the Labour party's proposal on the leasing of rolling stock was impractical. It is a pleasure to see him, albeit from an odd angle, standing on his head at the Dispatch Box.
For some time, Labour Members have felt that the leasing of rolling stock was sensible because it would allow the newly formed leasing companies to raise private capital for new trains without having an impact on the external financing limits of the railway system. When we put that point to the Government, as we have done in the past few years, we were scorned, so we are delighted that yet another Labour party policy has finally been accepted by the Government.
I listened with interest to the speech of the hon. Member for Southend, East (Sir T. Taylor), who has some reason for not being in his place at present. I appreciate the British Rail versus the SNCF argument. Generally, the hon. Gentleman is not overly keen on foreigners—he has made that plain in many debates in the House. He did not go so far as to imply that the employees of SNCF would trundle up and down through Fenchurch Street station and on to Southend wearing striped jerseys and berets and reeking of onions or garlic, but one got the general drift that he was not overly keen on the prospect of the French railway system intervening or operating trains in his part of the world.
When one looks at the comparative efficiency of British Rail and SNCF, the illogical nature of the legislation strikes one because the Government have admitted that BR's productivity and ability to run a railway system have recently improved dramatically and, indeed, by any

benchmark exceed that of SNCF. However, not only will BR not be allowed to bid for railway franchises, but, in the event of a franchisee not renewing his franchise or going bust during the period of the franchise, British Rail will not be allowed to take over. Yet we have heard from Ministers that a less efficient, foreign-owned railway system will be allowed to take over. It is a rum form of Toryism. I always thought that Toryism was a fairly rum creed, but it gets rummer the more one looks at the proposals in the legislation.
The right hon. Member for Tonbridge and Mailing (Sir J. Stanley) understandably expressed concern about the likely impact of the proposals on fares in his constituency and on Network SouthEast. He is right to express that concern because it is the Government's intention to reduce and eventually eliminate subsidies to Network SouthEast commuter trains by 1995. It is no wonder that the right hon. Gentleman is concerned. He has a reputation of being the ultimate Thatcherite in his younger days. However, like most other Thatcherites, he is not overly keen on the plunge in the cold bath of reality when it affects his constituency or—as subsidies are likely to be reduced or eliminated by 1995—his re-election prospects. If the subsidy to Network SouthEast has been abolished by that time, it will at least provide Conservative Members with a ready talking point on the doorsteps during the next election campaign.
It is acknowledged, not least in the latest report on rail privatisation by the consultants Steer Davies Gleave, that fares on Network SouthEast would have to rise by 37 per cent., presumably by 1995, if the Government's intention to withdraw the subsidy were realised. I understand the concern of the right hon. Member for Tonbridge and Mailing and I appreciate the thinking and the feeling behind his amendment. I am not sure whether he has got the right person to whom to appeal for a ruling on the reasonableness or otherwise of the proposed fare rises, given the Government's intention and the duties of the franchising director to allocate routes depending on the quality and level of bids. Is the franchising director the right person to decide on the reasonableness of those fare increases? The right hon. Gentleman might consider the regulator a more suitable person.
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Not only is it politically reckless for the Government to present such proposals, but they will add considerably to the congestion on south-eastern roads and make it more difficult for Tory Members to be re-elected. That last point will not cause me to lose much sleep, although it is obviously disturbing to the right hon. Member for Tonbridge and Mailing, whose amendment is in this group.
Is it logical to stand by while the increases illustrated by Steer Davies Gleave are implemented? Given the Government's intention to abolish the subsidies, perhaps the Minister of State will tell us whether he thinks that the amendment tabled by the right hon. Member for Tonbridge and Mailing is reasonable.
The hon. Member for North Devon (Mr. Harvey) also said that the proposed legislation was nonsense. He mentioned the refusal to countenance the idea of the expert at running trains, British Rail, taking over a franchise. That is not fair to the management of BR. When I worked at BR, there were good and bad managers and the campaign of denigrating BR management has had an


enormous impact on managerial morale. To suggest that people are effective as managers only if they mortgage their homes to put together a buy-out is as insulting as it is untrue. The Minister of State should look again at the whole issue of BR's managerial involvement. If the legislation is implemented with its provisions unscathed, there will be a further deterioration of managerial morale in the railways and the consequences of that will be borne by all our constituents.
The Minister should reply to the issues raised by the hon. Member for North Devon. I welcome the Minister's conversion to the principle of leasing rolling stock, but the amendments address many matters that are eminently unsatisfactory.

Mr. Paul Channon: I apologise to the House for not being here at the beginning of the debate. The issues that my hon. Friend the Member for Southend, East (Sir T. Taylor) and 11 wish to raise are more apposite to the ammendment tabled by my right hon. Friend the Member for Tonbridge and Malling (Sir J. Stanley) than to some others.
My second apology is to my hon. Friend the Minister of State. It is never wise for ex-Secretaries of State to return to issues after they have been away from them for a few years. They are clearly out of date and probably have everything wrong. No doubt the Minister will politely correct me if I make some mistakes.
I am strongly in favour of the Bill and I hope that I am not the only hon. Member who takes that view. If I were not strongly in favour, I would certainly have landed the Government with a poisoned chalice. Perhaps I have done that. The Bill will bring long-term benefits to my constituents and to rail travellers in my constituency. [Interruption.] I intend to deal not with the macro side but with some of the small problems in my part of the world. I used to have to deal with the macro side and it is a great relief not to have to do that any more.
The point that some of my constituents raise with me is that, although they know perfectly well that over the past 50 years or so their service to London has left a great deal to be desired, they are alarmed by what is proposed in the Bill because they want to hold on to nurse for fear of getting something worse. I hope that my hon. Friend the Minister, when he considers the points raised by me and by my hon. Friend the Member for Southend, East, will consider how we can reassure them—because they are eminently reassurable.
I believe that, before the franchises are awarded, it is important to consult those people in the local community who have strong views and some experience of how those rail services are or should be run. That is why I strongly believe that there should be some form of consultation or discussion with the local railway travellers' associations and perhaps with the consultative committees, so that those who are the leaders on this issue in my constituency —and, no doubt, many others—can be seized of the merits of the case. They will know why Mr. X has become one of the franchisers rather than Mr. Y and what criteria have led the Government or the franchising director to that decision. Such people should know some of the contents of the franchise—perhaps some things will be commercially confidential and will not be able to be revealed, but there will be some things that can easily be revealed. That would go a long way, at the beginning, towards reassuring people who are nervous about what might take place.
My right hon. Friend the Member for Tonbridge and Mailing raised in his powerful speech the most important issue of all—fares. I respect and believe the assurances given by my right hon. and hon. Friends, during the passage of the Bill and before, about what will happen to fares on commuter lines if the new system is adopted. I am not particularly worried about that because I know that my right hon. and hon. Friends will make sure that, on fares, nothing dreadful happens to my constituents. If something dreadful does happen, not only my seat but several hundred seats around London will be lost. The Government would be foolish to try it, so I am confident about that.
It is not surprising that representatives of the commuters in my area, who do not have the experience or the pleasure of knowing my right hon. and hon. Friends as well as I do, are naturally nervous about the matter. My right hon. Friend the Member for Tonbridge and Mailing outlined their anxieties, quite rightly, a few moments ago. I endorse everything that he said, and that may reassure one or two hon. Members who are nervous about some aspects of the Bill.
I would ask my hon. Friend the Minister, when he winds up, to give careful consideration to trying to make sure that, when the changes take place, local people are fully consulted so that they know what they are in for and it does not come as a tremendous surprise. I think that they will find that they are very pleased with what will happen to them when the franchising takes place—that is the Government's intention and my intention, and I am sure it will be achieved—but they need to be helped, reassured and encouraged.
I would echo the tributes paid to my hon. Friend the Minister. He has paid several visits to my constituency, ridden on the notorious misery line, and lived to tell the tale. He does not look too bad for having done so. I, too, have done so, and I can say that in recent months the line has got a great deal better. There is a considerable local problem, but I believe that franchising the service is likely to improve the position.
I ask my hon. Friend the Minister to give sympathetic consideration to the need to consult people, to take note of their views—in particular, the local railway travellers' association—and to give careful consideration to them before the franchises are awarded.

Mr. John Gunnell: Much of the press comment on the Bill recognises that it creates a new class of endangered species—that of the railways system and its dependants. Many of the amendments tabled for consideration seek to protect those dependants. The right hon. Member for Tonbridge and Mailing (Sir J. Stanley) has moved an amendment which clearly seeks to protect passengers and the reference to the consultative system is again an attempt to protect passengers.
Other amendments will be moved which seek to protect freight users, lines from closure and employees—we have already had a debate about protecting employees. I suspect that the Government know well that many aspects of the railway system are seriously threatened by the Bill. The Minister commented on leased rolling stock, which is also affected by new clauses 13, 14 and 18, an issue that we must consider fully, and that has been raised several times in the debate.
New clause 4, on the duty to furnish information, does not specify what information it is expected will be


required. Let me suggest to the Minister the information that I think should be known to the franchising director. He should have a view on the historic costs of every service going out to franchise. That view should also be made available to the public. When services are to continue and support is offered by the franchising director, it is important to know what the cost of those services is now so that comparison may be drawn between the cost of the services run by British Rail and the anticipated cost under a franchising system.
That information is necessary because the invitation to tender, which comes from the franchising director, must contain the best available information so that bidders can respond appropriately, bring forward cost-effective proposals and have an idea as to about where their bid should be pitched. We do not expect that there will be an excessive number of bidders. It is clear that there are likely to be few and only a few services may go out to franchise in the first instance. It is important that we set down and make public the costs and that they form part of the tendering process. It is also important that the franchising director has information on aspects of the track so that he is able to inform Railtrack of where new investment will be necessary. He will have to have much information that will need to be disclosed.
Amendment No. 237, to which the right hon. Member for Tonbridge and Mailing spoke, concerns the fare levels that will be required and imposed. They will be affected by the amount that the franchising director is willing to pay for services. He will make a judgment about fares if he knows the current usage and costs of operating that line. He will be able to set the subsidy, which will enable bidders to draw a relationship between the passenger throughput and the possible rate of return on investment. It is important not only that his judgments are based on information, which he can obtain through new clause 4, but that that information is given to the public.
Rolling stock was mentioned in the debate that preceded Second Reading and on Second Reading. It came up frequently during our debates. We recognise that the Bill threatens the railway engineering industry in a way that passengers, freight users and the environment are not threatened at this stage. They will be affected only when the Bill comes into operation and we find out whether it works. The railway engineering industry began to suffer as soon as the whiff of privatisation was in the air. That is made clear in the Select Committee report.
The report literally illustrates the point graphically. It sets out the levels of the order books of the railway engineering companies and suggests that by the end of 1995 there will be no orders on those books. The report clearly shows how long it has been since orders were placed by British Rail and others. The fall-off in business has been significant. When speaking to the Select Committee, Lord Prior said that £150 million over three years was nothing like sufficient and that unless there were more orders there would be no industry left in three years.
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I and other hon. Members who served on the Standing Committee acknowledge that the Minister is a good listener and that he responds constructively whenever possible. We welcome the fact that he has included in the new clause the ability for the franchising director to pass

on rolling stock. That is a constructive move, because without it no one will want to acquire rolling stock for relatively short leases. The ability to pass on leased rolling stock is essential if the railway engineering industry is to get orders.
I want to ask some questions about the way in which the franchising director's ability to pass on rolling stock links with new clause 14, which deals with the ability to form finance companies, and new clause 18, which also refers to financing. The three hang together—

Mr. Deputy Speaker (Mr. Michael Morris): Order. I hope that the hon. Gentleman will not use new clause 14 as a key element in his argument, but will wait until we reach that new clause. The same applies to new clause 18. The hon. Gentleman's argument must be centred on the new clause before the House.

Mr. Gunnell: I thought that this was the time to raise points about the rolling stock aspects because three other hon. Members, including the Minister, have done so. However, on the question of the financing of that stock I shall happily wait until we reach new clause 18 and make a brief contribution then.

Mr. Alan Williams: On a point of order, Mr. Deputy Speaker. I draw your attention to new clause 23, which refers to schemes relating to the transfer of assets. It is in that context that the Minister and other hon. Members referred to the transfer of rolling stock and that is why my hon. Friend referred to it.

Mr. Deputy Speaker: I am grateful to the right hon. Gentleman. I heard the other contributions to which he referred. The hon. Member for Morley and Leeds, South (Mr. Gunnell) specifically referred to new clauses 14 and 18 and said that he would develop his argument. I am saying that he must concentrate his remarks on the new clauses before us. If he wishes to speak later on new clauses 14 and 18, that is appropriate—but he cannot develop his argument on those new clauses now.

Mr. Gunnell: I shall rest my case at this stage by saying only that I recognise that the financial aspect of leased rolling stock is part of the franchising director's ability to pass on that stock. However, I must say that that is necessary as a protection for the railway engineering industry only because of the threats resulting from privatisation. I am not saying that the new clause is necessary in itself—it would be better to be without the Bill and then we would not need the new clause.

Mr. James Couchman: My right hon. Friend the Member for Tonbridge and Mailing (Sir J. Stanley) opened up the question of fares very elegantly, supported by my right hon. Friend the Member for Southend, West (Mr. Channon). The latter and I are in competition for representing the worst commuter line into London. Those from Essex maintain that the line from Southend is the worst; we in Kent believe that the run from the Kent coast and the Kent link, along the north Kent coast, are worse than the Essex run. Either way, we compete for the worst rail link in Network SouthEast.
That is why I am on my feet this evening. Although I have not been deluged with letters about the Bill by my constituents, they have raised justifiable concerns about what may happen to them. They travel into London along a line of about the same length as the one from Tonbridge


and they pay about £2,000 a year to stand in filthy carriages being transported from the Medway towns. My constituency includes a station on the Kent link and one on the Kent coast line. Although the Kent link trains are beginning to improve, the Kent coast trains are still dreadful. My constituents fear that they will end up travelling on the same clapped-out rolling stock but paying a good deal more for the privilege.
I think that it was the hon. Member for West Bromwich, East (Mr. Snape) who mentioned the much-vaunted Steer Davies Gleave report which makes an even more horrific suggestion—that fares on London commuter services would have to rise by at least 58 per cent. if the Government went ahead with their plans to halve Government grant over the next three years.
My constituents considered that the increase that they suffered in January this year—because of poor standards of service on the north Kent line, it was limited to between 5 and 6 per cent., compared with the average 8 per cent. —was unreasonable. They would consider an increase of 10 times that amount extremely unreasonable. They are particularly worried that the sort of investment which will be needed on the Kent coast lines into London over the next decade will be so large that, to achieve the return of 8 per cent. for the Treasury, heavy fare increases will be required. My constituents have some aspirations to an improvement in their service when the channel tunnel fast link is built, because commuter trains may be allowed to travel on the line, joining it somewhere close to Dartford. But even then, they will be expected to pay a premium for the privilege of shortening their journey.
I support my right hon. Friends the Members for Tonbridge and Mailing and for Southend, West. Like them, I should like to hear from the Minister of State what sort of fare increases he would consider reasonable for my constituents, who daily pay a high price to travel on a very poor service from north Kent and the Medway towns.

Mr. Cryer: The new clause gives the impression that the Government are anticipating dealing with a gang of crooks. This will not be a decent organisation in which franchisees compete with one another to provide excellent services:
A person who intentionally alters, suppresses or destroys any document which he has been required by any notice under subsection (4) above to produce is guilty of an offence and shall be liable—
(a) on summary conviction, to a fine not exceeding the statutory maximum;
(b) on conviction on indictment, to a fine."


So the Government anticipate that some dubious people will engage in the franchising process—so much so that they feel the need for criminal sanctions to make sure that people provide information to the appointed director. That is a peculiar attitude to adopt. Some Conservative Members say that, save for a few minor reservations about fares and other such matters, they agree with the principle of the Bill. It is an odd principle to embrace in which criminal sanctions will be used to provide information on which to base judgments about awarding franchises.
Also, much energy and time will need to be devoted to awarding franchises, but that will not help passengers. We are talking not about any improvement to the service or new rolling stock but about documentation. The Department of Transport suggest that as many as 14,000 contracts could he created. There is no doubt who will

benefit from that—Messrs Sue, Grabbit and Runne. Enormous fees will fall payable to lawyers as arguments about franchise contracts run riot.
Experience of British Rail privatisation so far suggests that there will be confusion. The only examples of privatised services on British Rail have gone into liquidation, such as Yeoman and Stagecoach. Those services have gone by the board. Another is apparently not in a good financial state but the Secretary of State has asked British Rail not to foreclose on that operation during the passage of the Bill because it would embarrass the Government. That does not augur well.
When people become involved in drawing up contracts, arguing about the amount of information provided, and threaten legal action to obtain such information, that energy is not being devoted to running a railway service, running clean trains into stations on time, timetabling to the convenience of passengers, and the multiplicity of other aspects that go into running a railway.
It is not easy to run a railway, particularly given the highly intensive services that operate in the United Kingdom. They take much effort, and many men and women, in providing services that run on time. The Bill undermines those people, and that will add a crazy bureaucracy, with threats of legal action of one sort or another, civil or criminal—as new clause 4 stipulates.
The scope of the new clauses indicates a lack of Government preparation. They produced a White Paper and took the Bill through Committee, but still they are introducing mammoth new clauses. That is hardly the action of a Government who have considered the legislation and are well prepared to put it before Parliament. It is the action of a Government making a last-gasp attempt to arrive at a vaguely workable solution. Throughout the nation, the public are deeply apprehensive about the Government's proposals. I am pleased that the Government have at long last acknowledged, in clause 23, rolling leases—so that as one franchisee collapses into liquidation, leases can continue to provide a degree of security for leaseholders.
As the Minister well knows, that arrangement was requested two years ago for electrification of the Airedale and Wharfedale lines. The Government could not agree and as a result there is still an argument about the provision of new rolling stock on the lines that are currently being fitted with overhead electrification. There is still a possibility that second-hand and third-hand rolling stock that has cascaded down from other services will be used on a brand-new, electrified railway providing an intensive commuter service.
Incidentally, on occasions the Airedale and Wharfedale uses four-wheel rail buses, which do not provide the best ride, coupled together to provide a barely adequate service that is highly overcrowded at peak times. I wish that the Minister had adopted the ideas in new clause 23 about 18 months ago, because then we could have arranged leases. That would have obviated the problem that arose when, because of the uncertainty surrounding the Government's proposals, the Royal Bank of Scotland refused to provide the cash to introduce new rolling stock under a leasing system. It is a belated conversion. That is recognised in new clause 23. If it provides some degree of certainty that new rolling stock will be provided, it is a step in the right direction, although it is a minor one when one considers the chaos that the Bill will cause.

Mr. Alan Williams: Because of the way in which they have been reported, hon. Members misunderstand the leasing arrangements. Is my hon. Friend aware that British Rail will not be allowed to take on leases? It was made clear in Committee by the Scottish Office Minister that if British Rail takes on any leases it will be under an obligation to pass them on at the first opportunity to a franchisee.

Mr. Cryer: I am grateful to my right hon. Friend. In the case of the Airedale and Wharfedale line, it happened to be the passenger transport authority that would have undertaken the leasing. As the Government had not produced clear proposals, financial institution after financial institution said, "Because we do not know what the future will bring, there is absolutely no guarantee. Therefore we shall not support the passenger transport authority." A lamentable position was created by these nutty proposals.
Amendment No. 237, which stands in the name of several Conservative Members, is a reasonable proposal, but, unlike them, I am completely opposed to the principle of the Bill. It spells chaos and uncertainty and in the worst set of circumstances it means that services will not run. Those Members of Parliament with Southend constituencies cannot get across the virtues of the Bill to the people of Southend, so they are begging the Minister for a titbit to persuade their constituents that everything is all right. They will find, however, under the worst possible confluence of circumstances, that trains do not arrive at Southend. If a firm goes into liquidation overnight, there will be absolutely no possibility of services running the following day if the receivers are called in and they say that they cannot authorise further activity by that company. The franchising director has the power to arrange for services to continue, but it remains a real possibility that in the worst possible confluence of circumstances, services will not run.
Any amendment that suggests that some regard should be paid to fares should be incorporated in the Bill. A few hon. Members have said that it could be argued that higher fares are necessary because of the need to invest. Those arguments were used when water was privatised. However, even some Conservative Members who voted for water privatisation now say that charges are too high and that a balance has to be struck between the need to invest and the ability of water customers to pay the bills. One Conservative Member of Parliament who voted for water privatisation even went to the extent of introducing a ten-minute Bill that would have brought about a change in the structure in either Kent or one of the south-western counties. It would have led to that county being exempt from the increased charges that the water company had justified, on the basis of the need to invest.
The same argument could be used regarding fare increases. Passengers in an area that depends heavily on commuters are entitled to be able to make a judgment between the amount of money spent on investment and the amount of money that they can afford to pay when they have to travel between 50 and 60 miles to get to work.
I should have thought that amendment No. 237 had some merit in that it does not impose an absolute obligation on the Minister. However, if a group of passengers, some of whom are extremely well organised,

believed that the franchising organisations were charging too high a fare, it would give them the reserve right of a possible application for a judicial review at the worst of the confrontation, or would at least make the franchising operators conscious of a statutory obligation to passengers which, as the right hon. Member for Tonbridge and Mailing (Sir J. Stanley) said, is only sketchily outlined in the Bill.
It is worth reminding the House of something that we all know. Once the Bill has passed all its stages in this place, gone to another place, returned and has been given Royal Assent, it will be out of our hands. If it does not contain a safeguard for passengers, any protection will be well and truly gone.
I wish to ask the Minister about the line from Leeds to Bradford, up the Aire valley, through Keighley to Skipton, which is being electrified. It is a monopoly line as there are not two lines running up the Aire valley but only one.

Sir Donald Thompson: What about the hon. Gentleman's railway?

Mr. Cryer: It does not run up the Aire valley. The hon. Member is referring to the Keighley and Worth Valley line. It was discarded by British Rail many years ago, but I am happy to say that it is now running extremely well. The line to which he refers does not run up the Aire valley, but up the Worth valley which is a tributary to the Aire valley.
The Aire valley railway is a monopoly. When it is electrified, will the Aire valley route be treated as a monopoly and will fares be capped? If so, we should know about it and we should also know what form the capping will take. The Government say that capping is very popular with local authorities, although there is not much evidence of that. They say that they cap local authorities because they do not want local authorities to place too heavy a burden on local council tax payers. The same argument will surely be applied to rail fares so that franchisees are not allowed to become too greedy.
The Minister may expatiate on the virtues of the water and telephone privatisations, but no one, other than the blind and ideologically foolish, could say that people on the boards of privatised concerns have not exhibited greed in levering their salaries to heights which have invoked derision and contempt from the customers who have to pay. There is nothing to make us suppose that that could not happen with the franchising operators if they could get away with it.
It will be interesting to know whether the lines in the area that I represent will be subject to fare capping limitations so that people who have to commute in and out of Leeds and Bradford will not suffer enormous burdens as a result of the legislation. We want to find out what improvements we can make to the legislation because, as drafted, it is a recipe for utter railway chaos, degradation and gloom. We are merely trying to improve what is hopeless, wholly ideologically daft legislation which should have been thrown out at the beginning.

Mr. Terry Dicks: I declare an interest because I am a consultant to Hertz Rent a Car. I wish to raise one issue, and I believe that this is the correct group of amendments under which to raise it.
I am worried about the fact that the Bill does not mention protection for people who provide services at stations. Hertz Rent a Car has a contract with British Rail,


which enables it to provide such a service. The Bill contains no mention whatever of what will happen to its arrangements after privatisation. The Minister may say that, when an operator takes over the running of a station, a new arrangement or agreement can be made but the Bill contains no recognition of that.
The hon. Member for Kingston upon Hull, East (Mr. Prescott) will remember when we debated the Airports Act 1984. The same situation arose because it was suggested that the only people who used the facilities at airports were the airport owners and airline operators. We raised an issue similar to the one that I am raising now. There are others besides British Rail who use the stations. The franchisees, as in airports, earn a living from that facility.
When my hon. Friend replies, will he explain with some clarity exactly where the people who operate on the stations—in newspaper stands, Tie Rack shops or car rental—will stand under the new proposals and whether there will be any benefits for or guarantees of their future operation from those stations?

Mr. Alan Beith: My hon. Friend the Member for North Devon (Mr. Harvey) has already dealt with amendent (a). I shall voice some support for amendment No. 237, tabled by the right hon. Member for Tonbridge and Mailing (Sir J. Stanley). It raises issues that relate not only to the south-east and London commuter area, which the right hon. Gentleman described, but to other parts of the country.
Anxiety about levels of fares is found in many parts of the country and monopoly, as other hon. Members have said, exists in many areas. I take the example of the Berwick to Penzance train. Just after 9 am every day, a train departs from Berwick for Penzance. It is used by many people travelling to the west country and to the midlands along a route that may involve numerous different franchisees in the future. I notice that the list of franchises published today has still not been able to crack the problem of what to do with the Berwick-Penzance train. People using that train often travel on a combination of railcards, apex fares and whatever other bargain they can put together so that they can visit their relatives in another part of the country. They see themselves as potential victims of large fare increases on cross-country journeys.
I ask the Minister to take a sympathetic view of amendment No. 237 and to recognise the importance of declaring from the start that the franchising director has a responsibility on fares. He should not merely have, as the Government propose in the new clause, a right to concern himself with fares; he should be charged with the responsibility of promoting low fares.
The hon. Member for Bradford, South (Mr. Cryer) touched on the immediate consequences of receivership. I remain extremely concerned about what will happen when a contractor on a major route goes into receivership, which is quite possible as recent experience demonstrates. I believe that the trains will stop and that all action by the employees of the franchise holder will be immediately stopped. Notices will go up at stations saying that no further trains can be run, that announcements will be made in due course, that meetings are taking place, that approaches are being made and that the franchising director is having discussions with bodies that might run the franchise. In the meantime, there will be an interrupted service.
I am reminded of what can happen by the experience of a friend who sought to prevent a major company of which he was a director going into receivership. He was travelling on a train and making calls from his mobile telephone to set up meetings to try to get more orders for the company. At 9 am precisely, he ceased to be able to make any further calls. The message came on his mobile telephone, "Your mobile telephone service has been disconnected." It was disconnected because at 9 am the receivers walked in and gave immediate instructions that anything that might incur a charge or liability was to be stopped immediately. That is exactly what is likely to happen in the immediate aftermath of receivership.
I hope that the Minister can now give us some explanation about what will happen. Ministers have rightly used the argument in relation to strikes and industrial disputes that an interrupted service is a service that destroys itself. If trains are withdrawn, people will have to make other arrangements and transfer to some other form of transport. Through the possibility of receivership, which has not existed in the railway system before, Ministers are introducing the possibility of interruption of service every bit as damaging as strike action in that it will lead people to believe that the service is unreliable and one on which they cannot depend.
I have a question for the Minister about the powers of the franchising director. The previous assurance given by the Secretary of State has been questioned by people who have put the following point to me. The Secretary of State has said that passengers travelling from stations such as Berwick and Alnmouth will have confidence that their InterCity services will continue because the franchising director has the power to insist that the existing timetable forms the basis of the franchise.
It has been put to me that that power will effectively he non-existent where the franchise does not involve an element of subsidy. Where no subsidy is being offered and where there is a commercial franchise in which maximum commercial freedom is being offered, that guarantee will not exist. I hope that that is not the case. If it is, that would destroy the assurance given in terms by the Secretary of State during Question Time a month or two ago. Perhaps the Minister will address that.
My final point about the franchising director relates to what he does in relation to the boundary lines of the system. For example, I looked at the maps that were issued today and discovered from the Scot Rail map that Scot Rail is not allowed to run a train to Dunbar. It has no power to run a train there. It has no access to the railway line that leads to Dunbar which is an InterCity route. So far as I can see, Dunbar is the only station in Scotland to which Scot Rail cannot run a train.
9.45 pm
In addition, ScotRail cannot run a train to Berwick, which is the rail head for much of the borders, and into which subsidised bus services feed. What does the franchising director do if the franchisee with the service from Newcastle to Berwick, which is a local and minimal service with two trains a day, does not improve that service and the franchising director believes, as I believe, that it will be better to have a through service between Newcastle and Edinburgh picking up passengers at several stations including Berwick, Dunbar and Alnmouth? The franchise system that has been set out would not permit that to happen because ScotRail has no access to Berwick or


Dunbar. The regional franchise holder in the north of England has no access beyond Berwick, as the maps make clear. Only InterCity can provide that service. I presume that an InterCity contractor would not regard it as its role to provide a service stopping at smaller stations to which InterCity does not provide a service at the moment, for example, stopping at stations like Chathill, Acklington and Drem.
I do not understand what the franchising director will do in those circumstances, particularly if the InterCity contractor does not provide an adequate service, even to existing InterCity stations. I hope that the Minister can assist us in respect of some of those matters when he replies.

Sir Keith Speed: I should begin by declaring an interest as, for a number of years, I have been a consultant to InterCity. Perhaps, the right hon. Member for Berwick-upon-Tweed (Mr. Beith) and I can get together in order to help him with his problem.
The amendments and new clauses that we are discussing encapsulate some of the problems to which my hon. Friends have alluded. Reference has been made to the leasing of rolling stock. Following the initiative of my right hon. Friend the Chancellor of the Exchequer in his autumn statement, we know that £150 million was up for grabs for leasing. Unfortunately, the west coast main line, the London-Tilbury-Southend line and the Kent coast line require that money and £150 million between those three lines will go very little distance.
I believe that I am correct to state that the west coast main line needs £750 million to £800 million to improve rolling stock. The Kent coast main line desperately needs £550 million for new rolling stock. My hon. Friend the Member for Gillingham (Mr. Couchman) referred to that. In addition, the London-Tilbury-Southend line needs hundreds of millions of pounds for rolling stock and the infrastructure and signalling that the line so desperately needs.
We are talking about large sums of money and there seems to be a large lacuna in the Bill in relation to where the investment will come from in the short term, over the next two or three years, to at least maintain the present railway service and, hopefully, to improve it.
My right hon. Friend the Member for Tonbridge and Mailing (Sir J. Stanley) has tabled a very good amendment about fare structures. We know that there will be capping where there are monopolies such as in respect of many commuter lines into London. However, many right hon. and hon. Members have reminded us that many lines are not necessarily monopolies, but are essential to certain local communities. In some cases they require investment in new rolling stock and perhaps new track and other equipment which would justify quite considerable increases in fares.
My right hon. and hon. Friends from Kent will be aware that the Kent coast line requires a massive injection of investment and that could be used as an excuse to hoick up fares to service that £550 million worth of investment. Many commuters could then be priced out of the market. There is a real problem. I echo the calls for my hon. Friend the Minister to give a fair wind to the demands made by my right hon. Friend the Member for Tonbridge and Mailing for measures to be built into the Bill. That is terribly important. Exhortations from Secretaries of State or the House are insufficient. If a franchise decides at some

stage to hoick up fares unreasonably, Parliament has made the decision and must be reported to. I hope that we get a positive response.

Mr. Wolfson: Does my hon. Friend agree that there is no comparable role—as in other privatisations—to that of the regulator for the interests of the consumer? Does he also agree that the amendment, about the role of the franchise director, who must take into account reasonableness of fare increases, would go some way to rectify that?

Sir Keith Speed: I accept that, and go further. We should be learning from the lessons of some of the previous privatisation legislation to see whether Ofgas and Ofwat, for example, were given sufficiently wide powers. At least we are determined not to make the same mistake. I accept the point that my hon. Friend makes. I hope that we can learn from experience.
I commend the amendments tabled by my right hon. Friend the Member for Southend, West (Mr. Channon) and by my hon. Friend the Member for Southend, East (Sir T. Taylor). Local consumer groups and rail travellers' groups are terribly important. My right hon. Friend and my hon. Friend talked about the need of those groups to be informed by Ministers, but there is a great role for the groups to play, certainly in Kent, Essex and elsewhere, to inform Ministers and franchise operators. They have local knowledge, and know what is required. In Ashford, where new timetables have been drawn up, there has been much controversy. The role of the commuter groups in saying what they want, the stations they want to go to and the sort of timetable they want has been of immense value to British Rail and made a lot of commercial sense. The railway company is providing the service customers want rather than the service the railways want to operate. It is very much a two-way movement and I hope that the amendments tabled by my right hon. Friend and my hon. Friend can be accepted. They would make a positive contribution towards getting even better rail services, particularly in commuter areas.

Mr. Alan Williams: I want to take two minutes to focus attention on an anomaly to which the right hon. Member for Tonbridge and Mailing (Sir J. Stanley) drew the attention of the House earlier. He did the House a favour in doing so. We have been hearing about a fare cap. I served with some hon. Friends for more than 100 hours on the Committee stage of the Bill. Not only did the Committee not focus particularly strongly on the fare cap, but the matter did not even surface during the whole Committee stage. One wonders what the fare cap is all about. Is it about railways or divisions? Is it anything to do with real delivery or is it an attempt to lure the lambs on the Conservative Benches into the Lobby behind the Minister?
There is a basic incongruity in the argument. It is not possible to argue that subsidies will go on Network SouthEast. It is not possible to argue that there will be cuts in subsidies on the line mentioned by the right hon. Member for Tonbridge and Mailing and to argue that there will be a cap. As has been said, if there is a cap, there will be a 37 per cent. gap between the present fare structure and viability. Who is to take on the line mentioned by the right hon. Gentleman, which has a 58 per cent. viability gap? Why have not we heard about the capping before? The Secretary of State has not said much about the Bill. He did not come to the Committee to give us the benefit of his


thoughts on capping. There were more than 100 hours of argument in Committee, but not once did the Minister to my recollection shelter behind the defensive position that a cap would have given him when fares were referred to.

Sir David Mitchell: Has the right hon. Gentleman failed to take account of the £300 million subsidy that goes into Network SouthEast and the £700 million that goes into the other regional railways? If the right hon. Gentleman took that sum of some £1,000 million into account, I think that his argument would be rather different.

Mr. Williams: The hon. Gentleman has just made my case foir me. That money must be made up with capped railway fares, because, according to the Minister, the railways will not receive those subsidies in future. The objective is to phase out the subsidies for Network SouthEast. The right hon. Member for Tonbridge and Mailing cited his area.
I do not mind how the Minister squares the circle. Conservative Members obviously want to be persuaded and I shall be fascinated to hear what he has to say; but —I say this particularly to hon. Members who have been in the House for a while and are not too dewy-eyed about ministerial assurances—it is strange and puzzling that a fare cap should suddenly appear at the same time as a mini-rebellion. I suspect that, ultimately, the fare cap will prove to have as little reality as the rebellion.

Mr. Tim Rathbone: Let me say a little about amendment No. 237. There is no doubt that many of our constituents who use British Rail frequently—whether to commute, to shop or for pleasure—are very concerned about the effect of privatisation on fares. We have heard a number of arguments today about how their concern will be met, but it seems almost certain that costs will increase, at least in the short term.
One possibility is capping fares on the one hand and increasing Government subvention on the other. As the right hon. Member for Swansea, West (Mr. Williams) pointed out, there is room for doubt about how long that subvention will continue, which points to an increase in fares. The Select Committee's report advocated a strict limit to fare increases, tied to the retail prices index. The Government replied that they would
give guidance to the Franchising Director on this matter.
Amendment No. 237 was tabled in an attempt to elicit just that guidance.
It is unreasonable to expect people to accept that the Government's proposals will lead to improved efficiency and improved services if they cannot take advantage of those improvements because of extraordinary increases in costs. I urge Ministers to bear the consumer interest in mind, especially in regard to amendment No. 237.

Dr. Marek: The two amendments that have caught the House's attention in the past hour and a half are amendment (a) to new clause 23 and amendment No. 237. Let me make a general point. Neither amendment would do grave damage to the Bill; in my view, they would both improve it no end. Notwithstanding the Government's political dogma, the amendments would not drive a coach and horses through it and might even make life easier for the Government at the end of the day.
What is the franchising director to do when a company goes bust and services are withdrawn or likely to be withdrawn at a moment's notice? He can try to form a

company himself—under some of the Government's new clauses he will have various possibilities to consider. But the easiest way would be to ask the British Railways Board to run the service again. It may take the franchising director five minutes or half an hour to decide, but I am sure that the board would be prepared to take on that duty as it would have the skills, expertise and capability to do so.
Why are the Government resisting amendment (a)? The only answer to that can be political dogma—

It being Ten o'clock, the debate stood adjourned.

Motion made, and Question put forthwith, pursuant to Standing Order No. 14 (Exempted business),
That, at this day's sitting, the Railways Bill may be proceeded with, though opposed, until any hour. —[Mr. MacKay.]

Question agreed to.

Question again proposed, That the clause be read a Second time.

Dr. Marek: The Government must be resisting the amendment purely on the grounds of political dogma. They are not interested in running a proper railway service with a proper national timetable with connections that will enable people to transfer from one train to another. They are more interested in divesting themselves of the responsibility of running the railway services. If that is not the case, the Minister must put a lucid and persuasive case to the contrary, and I do not believe that he can. If the Bill is ever enacted, amendment (a) will help the Government, rather than hinder them.
Amendment No. 237 will not shake the Bill to its foundations and the Government should not resist it. The amendment should be properly considered by the House.
Clause 4 imposes a number of duties on the regulator. There are seven duties, (a) to (g), which are somewhat conflicting. The first duty, (a), is
to protect the interests of users of railway services".
That duty will not always run in tandem with (f), under which the regulator has to
impose on the operators of railway services the minimum restrictions which are consistent with the performance of his functions under this Part".
In individual cases, the regulator will have to decide which of the duties assigned to him is most important. Clearly, the functions contain nothing about the fare levels, although clause 4(1)(a) contains the general statement:
to protect the interests of users of railway services"— [Interruption.]

Madam Speaker: Order. The House must come to order. The hon. Gentleman is having difficulty making himself heard.

Dr. Marek: Thank you, Madam Speaker. I shall not speak for too long. [HON. MEMBERS: "Oh."] Hon. Members must not tempt me as I could introduce more issues that need to be raised. However, for the convenience of the House, I shall try to keep my remarks brief.
In Committee I tried to introduce an amendment that would raise the level of clause 4(1)(a) to make it more important than (b) to (g), but the Government refused to entertain any such amendment, and persuaded their Back Benchers to vote against it. Amendment No. 237 is a sensible amendment. The amendment will not wreck the Bill or drive a coach and horses through it. It is in the interests of consumers and railway passengers—I speak as a railway passenger. Before Conservative Members troop


into the Lobby, I hope that they will examine the proposals carefully. The Government's life is not at stake. The Minister's hair shirt should not be at stake over something like this. However, passengers and railway users will benefit if the regulator is able to exercise some of his power in favour of consumers by keeping down unwarranted and unnecessary fare increases.
If the hon. Member for North Devon (Mr. Harvey) and the right hon. Member for Tonbridge and Mailing press their amendments to a vote, they can be sure that they will have my support.

Mr. Wilson: We are moving towards a vote and I certainly do not want to detain the House for long. However, some of the points raised require a little elaboration.
The right hon. Member for Tonbridge and Mailing (Sir J. Stanley) said that the cost of transport is the second biggest household item. It is worth noting that hon. Members are privileged to be spared at least one item from which many of our constituents suffer—the cost of parking at stations. We all have our little passes. Sharper-eyed Members in the House may have noticed that the new passes run from May 1993 to March 1994 instead of May 1993 to May 1994. The reason is that no one knows who will own the car parks, run the trains, own the stations, and so on after March 1994.
It is rare to find Tory Members voting against self-interest—they will vote for the abolition of these little passes as well as the fragmentation of the system. I do not care about the passes, but I care very much about the loss of network benefits to pensioners, young people and all the other constituents who will suffer as a result of the Bill.
The hon. Member for Southend, East (Sir T. Taylor) asked about the railway companies that will be able to bid for franchises. We know that British Rail will not be able to bid. It will be written out of existence—it will be given the airbrush treatment. It will be excluded from all its present roles as rapidly as the Government can achieve that. As the hon. Gentleman said, it is not only state-owned railways that will be excluded, because the state railways of Germany, France, Ireland or any other EC country will be able to bid for franchises. The only state railway that will not be able to bid or play a proper part in our nation's affairs is that of Britain. That is not a measure born of rationality or one excluding the public sector; it is a specific act of prejudice against British Rail which cannot be dressed up in any other way.
As the right hon. Member for Tonbridge and Mailing said, there are three elements that lead with all certainty to substantial increases in fares if the legislation is passed. The first element is that private companies will reasonably be looking for a profit—they would not be in the business if they were not looking for a profit—so that new element will have to be extracted from somewhere.
The second element is subsidy. Earlier, it was said that the subsidy for the current year has been reduced by 23 per cent. It might increase next year and come down the year after that, but the overall expectation is that it will be a decreasing subsidy. The ability of franchisees to make ends meet will depend on that element, which is entirely in the hands of the Government. If franchisees cannot get the money from subsidy in any given year and are making

insufficient profit, the only other source of revenue is fares. No hon. Member should disguise from himself the inevitable consequence of fare increases.
The existing railway will not be the only one to bid for subsidy, even if it continues at the present level. In Committee, the Minister for Public Transport said that more services might qualify for grant than at present, but that that did not mean that the total cost of subsidy need be more. More services will bid for subsidy because, for reasons that defy logic, InterCity is to be broken up. Therefore, a railway which currently does not require subsidy, which makes a small profit, will lose its profitable parts to the private sector. Overnight, that will create a new subsidised railway. The loss-making parts of InterCity will be added to the other loss-making railways which will also be bidding for subsidy.
Even if there is the same amount of money as at present, which I doubt, more services will compete for a share. There will be only one other source of revenue to bridge that gap—fare increases. The right hon. Member for Tonbridge and Mailing rightly spoke about the complete lack of control over fares. The three elements that lead to substantial fare increases are profit, subsidy and lack of control.
The most recent statement of Government policy on the matter was issued last week in response to the Select Committee report. The tone of the Government's response to that unanimous report was derisory and weak on almost every point and it failed to give the satisfactory responses that the report demanded. The unanimous recommendation of the Select Committee was that the franchising director should not be able to permit fares that went beyond the retail price index for fare increases on all franchised services. The Government's response to that is instructive. They said:
The extent to which fares will be controlled will depend on the degree to which a franchise operates in a competitive market.
So far, so good, but the response continues:
Where real competition exists from other modes of transport, then the market will determine the level of fares which an operator can charge.
That sentence removes the possibility of intervening in a large swathe of services because there are few services on which there is competition between modes of transport. That next sentence in the response states:
Where an operator could use significant market power to the detriment of passengers, the franchising agreement will limit fare increases.
That sounds reasonable, but the response continues:
On the other hand, where passengers are expected to benefit from investment to improve the quality of service, then higher increases in fares may be justified.
Every route that has been mentioned in the debate will require massive investment, and all those routes are excluded from the protections supposedly offered by that reply. Every line in the country is subject to market forces on the basis of that Government response. The assurances are not worth the breath used to utter them because the caveats in the response ensure that the guarantees are meaningless. Whatever is given with one hand is always taken away with the other.
How can the right hon. Member for Southend, West (Mr. Channon) and the hon. Member for Southend, East oppose the amendment on the basis of the response from the Government? Those right hon. and hon. Members argue that huge investment is needed on the line, yet the


response from their Government is that if that investment is made, market forces will determine the level of fares. They can take nothing from the debate.

Mr. Geoffrey Dickens: rose—

Mr. Wilson: No, I shall not give way. The House is impatient for the debate to be concluded and I cannot imagine that anything that the hon. Gentleman could contribute would diminish that impatience.
The Steer Davies Gleave report cannot be dismissed by the Government, because it was presented by the same consultants who advised them on bus privatisation. It is worth considering the three categories to which it referred. On InterCity, it stated that the projected 15 per cent. increase in costs meant that, whatever one did to fares, it would be impossible to make that service, once again, an unsubsidised one. The fares on InterCity journeys will increase, but even that money will not be enough to make that an unsubsidised service.
The report also states that, to cover the 15 per cent. increase in costs, it would be necessary to increase Network SouthEast fares by 37 per cent. on current levels. One can play with figures and mention 17 per cent, 27 per cent., 37 per cent. or above, but the message is clear: to generate the necessary returns, fares must increase greatly. The Bill provides no protection against that and hon. Members should not attempt to hide that fact from themselves.

Mr. Dickens: Will the hon. Gentleman give way?

Mr. Wilson: No, I shall not. The hon. Gentleman was not present for the debate and he cannot turn up now for a spoiling act. He cannot turn up for his sound bite, or, in his case, a large lunch.

Mr. Dickens: The hon. Gentleman is afraid to give way.

Mr. Wilson: Conservative Members do not like facts. They do not like to be told by the consultants' report and every other authoritative source—not by me—that the price of privatisation will be massive fare increases for all their constituents. They must learn to live with that if they pass the Bill.
The other category of services to which the Steer Davies Gleave report referred was regional railways. It stated that a 45 per cent. revenue increase was needed to offset the projected 15 per cent. increase in costs. Those are the facts.
If one passes legislation that will, inherently, increase the costs of running the railways—for reasons well understood by Conservative Members—the only way to pay for them is through increased fares.
On that basis, the Opposition would like to have the opportunity to vote for the amendment tabled by the hon. Member for North Devon (Mr. Harvey), but unfortunately it was not selected. In due course, we will vote for amendment No. 237, but, in the meantime, I ask hon. Members on both sides of the House to vote against new clause 4. Many Conservative Members have spoken a lot of sense about the issue, and if they voted against the new clause, they would record the feeling of the clear majority in the House and in our constituencies.

Mr. Freeman: The debate has lasted for about two and a half hours and it has concentrated, quite rightly, on fares

and the report of Steer Davies Gleave. I hope that hon. Members will forgive me if, in the interests of time and my intention to be concise, I do not cover all the points made in the debate. I shall, of course, write tomorrow to those hon. Members whom I do not answer.
My right hon. Friend the Member for Southend, West (Mr. Channon) and my hon. Friend the Member for Southend, East (Sir T. Taylor) sought an assurance that consultations would be held between the franchising director, the public and rail user groups. I can give that assurance. It is important that the franchising director bears in mind what the public wants.
The hon. Member for West Bromwich, East (Mr. Snape) spoke about the report by Steer Davies Gleave. I categorically reject the conclusions in the report. The assumptions are flawed because the consultants assumed substantial increases in the cost of leasing existing rolling stock which did not occur. They also assumed that Railtrack's charges will disappear outwith the subsidisation of passenger services, which will not happen.
As to subsidies, I can tell the hon. Member for Cunninghame, North (Mr. Wilson) that we have not fixed the passenger service obligation grant for next year or the year after. That subsidy is fixed close to the beginning of the financial year and it is incorrect to assume that the Government intend to reduce the subsidies of Network SouthEast or any other part of the railway system.

Mr. Snape: Is it or is it not Government policy, already announced, to reduce the overall subsidy for British Rail by 50 per cent. in the next three years?

Mr. Freeman: No decisions have been taken on the subsidy level for the simple reason that the only figure that is put into the Government public expenditure survey is the external financing limit. The level of subsidy has not been determined. The hon. Gentleman will know that, for the past three years, the Government have had to go back in the middle of the year to increase the subsidy because of the consequences of the recession on fare income. We have responded positively and constructively to the subsidy needs of British Rail.
Amendment No. 237 was tabled, and spoken to, by my right hon. Friend the Member for Tonbridge and Malting (Sir J. Stanley). The right hon. Member for Swansea, East (Mr. Williams) and my hon. Friends the Members for Ashford (Sir K. Speed), for Lewes (Mr. Rathbone) and for Gillingham (Mr. Couchman) also referred to it. The Government understand the concerns expressed about fare levels. In Standing Committee, a great deal of time was spent debating how the franchising director would control fare levels on monopoly services.
I understand the concerns of my right hon. Friend the Member for Tonbridge and Mailing on the matter. The amendment was selected relatively late. I assure him that, before we come to amendments Nos. 239 and 244, which relate to much the same issues, my right hon. Friend the Secretary of State and I will reflect on the debate. We look forward to answering the points and, I hope, satisfying my right hon. and hon. Friends tomorrow with appropriate assurances. The Government and my right hon. and hon. Friends share the same aims—to control fares on monopoly services and to demonstrate to our constituents, the electorate and passengers that we are serious and mean to control fare levels where it is appropriate.
I hope that, given those assurances, the House will support new clause 4.

Question put, That the clause be read a Second time—

The House divided: Ayes, 308, Noes 275.

Division No. 279]
[10.24 pm


AYES


Ainsworth, Peter (East Surrey)
Deva, Nirj Joseph


Aitken, Jonathan
Devlin, Tim


Alexander, Richard
Dickens, Geoffrey


Alison, Rt Hon Michael (Selby)
Dicks, Terry


Amess, David
Dorrell, Stephen


Ancram, Michael
Douglas-Hamilton, Lord James


Arbuthnot, James
Dover, Den


Arnold, Jacques (Gravesham)
Duncan, Alan


Arnold, Sir Thomas (Hazel Grv)
Duncan-Smith, Iain


Ashby, David
Dunn, Bob


Aspinwall, Jack
Dykes, Hugh


Atkinson, David (Bour'mouth E)
Eggar, Tim


Atkinson, Peter (Hexham)
Elletson, Harold


Baker, Nicholas (Dorset North)
Emery, Rt Hon Sir Peter


Baldry, Tony
Evans, David (Welwyn Hatfield)


Banks, Matthew (Southport)
Evans, Jonathan (Brecon)


Banks, Robert (Harrogate)
Evans, Roger (Monmouth)


Bates, Michael
Evennett, David


Batiste, Spencer
Faber, David


Bellingham, Henry
Fabricant, Michael


Bendall, Vivian
Fenner, Dame Peggy


Beresford, Sir Paul
Field, Barry (Isle of Wight)


Biffen, Rt Hon John
Fishburn, Dudley


Blackburn, Dr John G.
Forman, Nigel


Body, Sir Richard
Forsyth, Michael (Stirling)


Booth, Hartley
Fowler, Rt Hon Sir Norman


Boswell, Tim
Fox, Dr Liam (Woodspring)


Bottomley, Peter (Eltham)
Fox, Sir Marcus (Shipley)


Bottomley, Rt Hon Virginia
Freeman, Roger


Bowden, Andrew
French, Douglas


Bowis, John
Fry, Peter


Boyson, Rt Hon Sir Rhodes
Gale, Roger


Brandreth, Gyles
Gallie, Phil


Brazier, Julian
Gardiner, Sir George


Bright, Graham
Garnier, Edward


Brooke, Rt Hon Peter
Gill, Christopher


Brown, M. (Brigg &amp; Cl'thorpes)
Gillan, Cheryl


Browning, Mrs. Angela
Goodson-Wickes, Dr Charles


Bruce, Ian (S Dorset)
Gorman, Mrs Teresa


Budgen, Nicholas
Gorst, John


Burns, Simon
Grant, Sir Anthony (Cambs SW)


Burt, Alistair
Greenway, Harry (Ealing N)


Butcher, John
Greenway, John (Ryedale)


Butler, Peter
Griffiths, Peter (Portsmouth, N)


Butterfill, John
Grylls, Sir Michael


Carlisle, John (Luton North)
Hague, William


Carlisle, Kenneth (Lincoln)
Hamilton, Rt Hon Archie (Epsom)


Carrington, Matthew
Hamilton, Neil (Tatton)


Carttiss, Michael
Hampson, Dr Keith


Cash, William
Hannam, Sir John


Channon, Rt Hon Paul
Hargreaves, Andrew


Churchill, Mr
Harris, David


Clappison, James
Haselhurst, Alan


Clark, Dr Michael (Rochford)
Hawkins, Nick


Clarke, Rt Hon Kenneth (Ruclif)
Hawksley, Warren


Clifton-Brown, Geoffrey
Hayes, Jerry


Coe, Sebastian
Heald, Oliver


Congdon, David
Heath, Rt Hon Sir Edward


Conway, Derek
Heathcoat-Amory, David


Coombs, Anthony (Wyre For'st)
Hendry, Charles


Coombs, Simon (Swindon)
Heseltine, Rt Hon Michael


Cope, Rt Hon Sir John
Hicks, Robert


Cormack, Patrick
Higgins, Rt Hon Sir Terence L.


Couchman, James
Hill, James (Southampton Test)


Cran, James
Hogg, Rt Hon Douglas (G'tham)


Currie, Mrs Edwina (S D'by'ire)
Horam, John


Davies, Quentin (Stamford)
Hordern, Rt Hon Sir Peter


Davis, David (Boothferry)
Howard, Rt Hon Michael


Day, Stephen
Howarth, Alan (Strat'rd-on-A)





Howell, Rt Hon David (G'dford)
Patten, Rt Hon John


Howell, Ralph (North Norfolk)
Pattie, Rt Hon Sir Geoffrey


Hughes Robert G. (Harrow W)
Peacock, Mrs Elizabeth


Hunt, Rt Hon David (Wirral W)
Pickles, Eric


Hunt, Sir John (Ravensbourne)
Porter, Barry (Wirral S)


Hunter, Andrew
Porter, David (Waveney)


Hurd, Rt Hon Douglas
Portillo, Rt Hon Michael


Jack, Michael
Powell, William (Corby)


Jackson, Robert (Wantage)
Rathbone, Tim


Jenkin, Bernard
Redwood, John


Jessel, Toby
Renton, Rt Hon Tim


Johnson Smith, Sir Geoffrey
Richards, Rod


Jones, Gwilym (Cardiff N)
Riddick, Graham


Jones, Robert B. (W Hertfdshr)
Rifkind, Rt Hon. Malcolm


Jopling, Rt Hon Michael
Robathan, Andrew


Kellett-Bowman, Dame Elaine
Roberts, Rt Hon Sir Wyn


Key, Robert
Robertson, Raymond (Ab'd'n S)


Kilfedder, Sir James
Robinson, Mark (Somerton)


King, Rt Hon Tom
Roe, Mrs Marion (Broxbourne)


Kirkhope, Timothy
Rowe, Andrew (Mid Kent)


Knapman, Roger
Rumbold, Rt Hon Dame Angela


Knight, Mrs Angela (Erewash)
Ryder, Rt Hon Richard


Knight, Greg (Derby N)
Sackville, Tom


Knight, Dame Jill (Bir'm E'st'n)
Sainsbury, Rt Hon Tim


Knox, David
Scott, Rt Hon Nicholas


Kynoch, George (Kincardine)
Shaw, David (Dover)


Lait, Mrs Jacqui
Shaw, Sir Giles (Pudsey)


Lamont, Rt Hon Norman
Shephard, Rt Hon Gillian


Lang, Rt Hon Ian
Shepherd, Colin (Hereford)


Lawrence, Sir Ivan
Shersby, Michael


Legg, Barry
Sims, Roger


Leigh, Edward
Skeet, Sir Trevor


Lennox-Boyd, Mark
Smith, Sir Dudley (Warwick)


Lester, Jim (Broxtowe)
Smith, Tim (Beaconsfield)


Lidington, David
Soames, Nicholas


Lightbown, David
Speed, Sir Keith


Lilley, Rt Hon Peter
Spencer, Sir Derek


Lloyd, Peter (Fareham)
Spicer, Sir James (W Dorset)


Lord, Michael
Spicer, Michael (S Worcs)


Luff, Peter
Spink, Dr Robert


Lyell, Rt Hon Sir Nicholas
Spring, Richard


MacGregor, Rt Hon John
Sproat, Iain


Maclean, David
Squire, Robin (Hornchurch)


McLoughlin, Patrick
Stanley, Rt Hon Sir John


McNair-Wilson, Sir Patrick
Steen, Anthony


Madel, David
Stephen, Michael


Maitland, Lady Olga
Stern, Michael


Major, Rt Hon John
Stewart, Allan


Malone, Gerald
Streeter, Gary


Mans, Keith
Sumberg, David


Marland, Paul
Sweeney, Walter


Marlow, Tony
Sykes, John


Marshall, John (Hendon S)
Tapsell, Sir Peter


Marshall, Sir Michael (Arundel)
Taylor, Ian (Esher)


Martin, David (Portsmouth S)
Taylor, John M. (Solihull)


Mawhinney, Dr Brian
Taylor, Sir Teddy (Southend, E)


Mellor, Rt Hon David
Temple-Morris, Peter


Merchant, Piers
Thomason, Roy


Milligan, Stephen
Thompson, Sir Donald (C'er V)


Mills, Iain
Thompson, Patrick (Norwich N)


Mitchell, Andrew (Gedling)
Thornton, Sir Malcolm


Mitchell, Sir David (Hants NW)
Thurnham, Peter


Moate, Sir Roger
Townend, John (Bridlington)


Monro, Sir Hector
Townsend, Cyril D. (Bexl'yh'th)


Montgomery, Sir Fergus
Tracey, Richard


Moss, Malcolm
Tredinnick, David


Needham, Richard
Trend, Michael


Nelson, Anthony
Trotter, Neville


Neubert, Sir Michael
Twinn, Dr Ian


Newton, Rt Hon Tony
Vaughan, Sir Gerard


Nicholls, Patrick
Waldegrave, Rt Hon William


Nicholson, David (Taunton)
Walker, Bill (N Tayside)


Nicholson, Emma (Devon West)
Waller, Gary


Norris, Steve
Ward, John


Onslow, Rt Hon Sir Cranley
Wardle, Charles (Bexhill)


Oppenheim, Phillip
Waterson, Nigel


Ottaway, Richard
Watts, John


Page, Richard
Wells, Bowen


Paice, James
Wheeler, Rt Hon Sir John


Patnick, Irvine
Whitney, Ray






Whittingdale, John
Wood, Timothy


Widdecombe, Ann
Yeo, Tim


Wiggin, Sir Jerry
Young, Sir George (Acton)


Wilkinson, John



Willefts, David
Tellers for the Ayes:


Winterton, Nicholas (Macc'f'ld)
Mr. Sydney Chapman and Mr. Andrew Mackinlay.


Wolfson, Mark





NOES


Abbott, Ms Diane
Davis, Terry (B'ham, H'dge H'l)


Adams, Mrs Irene
Denham, John


Ainger, Nick
Dewar, Donald


Ainsworth, Robert (Cov'try NE)
Dixon, Don


Allen, Graham
Dobson, Frank


Anderson, Donald (Swansea E)
Donohoe, Brian H.


Anderson, Ms Janet (Ros'dale)
Dowd, Jim


Armstrong, Hilary
Dunnachie, Jimmy


Ashdown, Rt Hon Paddy
Dunwoody, Mrs Gwyneth


Ashton, Joe
Eagle, Ms Angela


Austin-Walker, John
Eastham, Ken


Banks, Tony (Newham NW)
Enright, Derek


Barnes, Harry
Etherington, Bill


Barron, Kevin
Evans, John (St Helens N)


Battle, John
Ewing, Mrs Margaret


Bayley, Hugh
Fatchett, Derek


Beckett, Rt Hon Margaret
Faulds, Andrew


Beith, Rt Hon A. J.
Field, Frank (Birkenhead)


Bell, Stuart
Fisher, Mark


Benn, Rt Hon Tony
Flynn, Paul


Bennett, Andrew F.
Foster, Rt Hon Derek


Benton, Joe
Foulkes, George


Bermingham, Gerald
Fraser, John


Berry, Dr. Roger
Fyfe, Maria


Betts, Clive
Galbraith, Sam


Blair, Tony
Galloway, George


Boateng, Paul
Gapes, Mike


Boyce, Jimmy
Garrett, John


Boyes, Roland
George, Bruce


Bradley, Keith
Gerrard, Neil


Bray, Dr Jeremy
Gilbert, Rt Hon Dr John


Brown, Gordon (Dunfermline E)
Godman, Dr Norman A.


Brown, N. (N'c'tle upon Tyne E)
Godsiff, Roger


Bruce, Malcolm (Gordon)
Golding, Mrs Llin


Burden, Richard
Gordon, Mildred


Byers, Stephen
Gould, Bryan


Caborn, Richard
Graham, Thomas


Callaghan, Jim
Grant, Bernie (Tottenham)


Campbell, Mrs Anne (C'bridge)
Griffiths, Nigel (Edinburgh S)


Campbell, Menzies (Fife NE)
Griffiths, Win (Bridgend)


Campbell-Savours, D. N.
Grocott, Bruce


Canavan, Dennis
Gunnell, John


Cann, Jamie
Hain, Peter


Chisholm, Malcolm
Hall, Mike


Clapham, Michael
Hanson, David


Clark, Dr David (South Shields)
Hardy, Peter


Clarke, Eric (Midlothian)
Harman, Ms Harriet


Clarke, Tom (Monklands W)
Harvey, Nick


Clelland, David
Hattersley, Rt Hon Roy


Clwyd, Mrs Ann
Henderson, Doug


Coffey, Ann
Heppell, John


Cohen, Harry
Hill, Keith (Streatham)


Connarty, Michael
Hinchliffe, David


Cook, Robin (Livingston)
Hoey, Kate


Corbett, Robin
Hogg, Norman (Cumbernauld)


Corbyn, Jeremy
Hood, Jimmy


Corston, Ms Jean
Hoon, Geoffrey


Cousins, Jim
Howarth, George (Knowsley N)


Cox, Tom
Howells, Dr. Kim (Pontypridd)


Cryer, Bob
Hoyle, Doug


Cummings, John
Hughes, Kevin (Doncaster N)


Cunliffe, Lawrence
Hughes, Robert (Aberdeen N)


Cunningham, Jim (Covy SE)
Hughes, Roy (Newport E)


Cunningham, Rt Hon Dr John
Hughes, Simon (Southwark)


Dafis, Cynog
Hutton, John


Dalyell, Tam
Illsley, Eric


Darling, Alistair
Ingram, Adam


Davidson, Ian
Jackson, Glenda (H'stead)


Davies, Bryan (Oldham C'tral)
Jackson, Helen (Shef'ld, H)


Davies, Rt Hon Denzil (Llanelli)
Jamieson, David


Davies, Ron (Caerphilly)
Janner, Greville





Jones, Barry (Alyn and D'side)
Powell, Ray (Ogmore)


Jones, Ieuan Wyn (Ynys Môn)
Prentice, Ms Bridget (Lew'm E)


Jones, Jon Owen (Cardiff C)
Prentice, Gordon (Pendle)


Jones, Lynne (B'ham S O)
Prescott, John


Jones, Martyn (Clwyd, SW)
Primarolo, Dawn


Jones, Nigel (Cheltenham)
Purchase, Ken


Jowell, Tessa
Quin, Ms Joyce


Kaufman, Rt Hon Gerald
Radice, Giles


Keen, Alan
Randall, Stuart


Kennedy, Charles (Ross, C&amp;S)
Raynsford, Nick


Kennedy, Jane (Lpool Brdgn)
Redmond, Martin


Khabra, Piara S.
Reid, Dr John


Kinnock, Rt Hon Neil (Islwyn)
Rendel, David


Kirkwood, Archy
Robinson, Geoffrey (Co'try NW)


Leighton, Ron
Roche, Mrs. Barbara


Lestor, Joan (Eccles)
Rogers, Allan


Litherland, Robert
Rooker, Jeff


Livingstone, Ken
Rooney, Terry


Lloyd, Tony (Stratford)
Ross, Ernie (Dundee W)


Llwyd, Elfyn
Rowlands, Ted


Loyden, Eddie
Ruddock, Joan


Lynne, Ms Liz
Salmond, Alex


McAllion, John
Sedgemore, Brian


McAvoy, Thomas
Sheerman, Barry


McCartney, Ian
Sheldon, Rt Hon Robert


Macdonald, Calum
Shore, Rt Hon Peter


McFall, John
Short, Clare


McKelvey, William
Simpson, Alan


Mackinlay, Andrew
Skinner, Dennis


McLeish, Henry
Smith, Andrew (Oxford E)


McNamara, Kevin
Smith, C. (Isl'ton S &amp; F'sbury)


Madden, Max
Smith, Rt Hon John (M'kl'ds E)


Mahon, Alice
Smith, Llew (Blaenau Gwent)


Mandelson, Peter
Snape, Peter


Marek, Dr John
Soley, Clive


Marshall, David (Shettleston)
Spearing, Nigel


Marshall, Jim (Leicester, S)
Spellar, John


Martlew, Eric
Steel, Rt Hon Sir David


Maxton, John
Steinberg, Gerry


Meacher, Michael
Stevenson, George


Meale, Alan
Stott, Roger


Michael, Alun
Strang, Dr. Gavin


Michie, Bill (Sheffield Heeley)
Straw, Jack


Michie, Mrs Ray (Argyll Bute)
Taylor, Mrs Ann (Dewsbury)


Milburn, Alan
Taylor, Matthew (Truro)


Miller, Andrew
Thompson, Jack (Wansbeck)


Mitchell, Austin (Gt Grimsby)
Turner, Dennis


Moonie, Dr Lewis
Tyler, Paul


Morgan, Rhodri
Vaz, Keith


Morley, Elliot
Walker, Rt Hon Sir Harold


Morris, Rt Hon A. (Wy'nshawe)
Wallace, James


Morris, Estelle (B'ham Yardley)
Walley, Joan


Morris, Rt Hon J. (Aberavon)
Wardell, Gareth (Gower)


Mowlam, Marjorie
Wareing, Robert N


Mudie, George
Watson, Mike


Murphy, Paul
Wicks, Malcolm


Oakes, Rt Hon Gordon
Wigley, Dafydd


O'Brien, Michael (N W'kshire)
Williams, Rt Hon Alan (Sw'n W)


O'Brien, William (Normanton)
Williams, Alan W (Carmarthen)


O'Hara, Edward
Wilson, Brian


Olner, William
Winnick, David


O'Neill, Martin
Wise, Audrey


Orme, Rt Hon Stanley
Worthington, Tony


Parry, Robert
Wray, Jimmy


Patchett, Terry
Young, David (Bolton SE)


Pendry, Tom



Pickthall, Colin
Tellers for the Noes:


Pike, Peter L.
Mr. Peter Kilfoyle and Mr. Gordon McMaster.


Pope, Greg

Question accordingly agreed to.

Clause added to the Bill.

Orders of the Day — New clause 13

TRANSFERS OF FRANCHISE ASSETS AND SHARES

'.—(1) It shall be the duty of the Franchising Director before entering into a franchise agreement to satisfy himself that if the franchise agreement is entered into—


(a) the initial franchise assets (if any) for that franchise agreement will be vested in the person who is to be the franchise operator; and
(b) if the franchise agreement is to be one under which the franchisee undertakes to secure that a wholly owned subsidiary of his provides the franchised services, that the franchise operator will be a wholly owned subsidiary of the franchisee.

(2) After a franchise agreement has been entered into, it shall be the duty of the Franchising Director before any property, rights or liabilities are subsequently designated as franchise assets in accordance with the terms of, or by amendment to, the franchise agreement, to satisfy himself that, if the property, rights or liabilities in question are so designated, they will be vested in the franchise operator.

(3) Without the consent of the Franchising Director, the franchise operator shall not—

(a) if and to the extent that the franchise assets are property or rights—

(i) transfer or agree to transfer, or create or agree to create any security over, any franchise assets or any interest in, or right over, any franchise assets; or
(ii) create or extinguish, or agree to create or extinguish, any interest in, or right over, any franchise assets; and

(b) if and to the extent that the franchise assets are liabilities, shall not enter into any agreement under which any such liability is released or discharged, or transferred to some other person.

(4) Where the franchise agreement is one under which the franchisee undertakes to secure that a wholly owned subsidiary of his provides the franchised services, the franchisee shall not, without the consent of the Franchising Director, take any action which would result in the franchise operator ceasing to be a wholly owned subsidiary of his.

(5) In any case where—

(a) there are to be initial franchise assets in relation to a franchise agreement,
(b) a franchise agreement is to be one which provides for subsequent designation of property, rights or liabilities as franchise assets, or
(c) property, rights or liabilities are to be designated as franchise assets by an amendment made to a franchise agreement,
the Franchising Director shall ensure that the franchise agreement includes provision specifying, or providing for the determination of, amounts to be paid in respect of the property, rights and liabilities which, immediately before the end of the franchise period, constitute the franchise assets in relation to that franchise agreement if and to the extent that they are transferred by transfer scheme at or after the end of that period.

(6) Without prejudice to the generality of the provisions that may be included in a franchise agreement with respect to the acquisition, provision, disposal or other transfer of property, rights or liabilities (whether franchise assets or not), the Franchising Director may undertake in a franchise agreement to exercise his powers under Part II below to transfer franchise assets to himself or another in such circumstances as may be specified in the franchise agreement.

(7) The Franchising Director shall ensure that every franchise agreement includes such provision (if any) as he may consider appropriate in the particular case for the purpose of securing—

(a) that the franchise assets are adequately maintained, protected and preserved; and
(b) that, at the end of the franchise period, possession of such of the franchise assets as may be specified for the purpose in the agreement, or by the Franchising Director in accordance with the agreement, is delivered up to the Franchising Director or such other person as may be so specified.

(8) In this Part, "franchise assets", in relation to any franchise agreement, means—


(a) any property, rights or liabilities which are designated as franchise assets in the franchise agreement as originally made (in this section referred to as the "initial franchise assets"), and
(b) any property, rights or liabilities which, after the making of the franchise agreement, are designated as franchise assets in accordance with the terms of, or by an amendment made to, the franchise agreement,

but does not include any property, rights or liabilities which, in accordance with the terms of, or by an amendment made to, the franchise agreement, have for the time being ceased to be designated as franchise assets.

(9) No rights or liabilities under contracts of employment shall be designated as franchise assets.

(10) In this section "security" has the meaning given by section 248(b) of the Insolvency Act 1986.

(11) Any sums required by the Franchising Director for making payments for or in connection with the acquisition, transfer or disposal of property, rights or liabilities in pursuance of provisions contained in a franchise agreement shall be paid by the Secretary of State out of money provided by Parliament.

(12) Any sums received by the Franchising Director for or in connection with the acquisition, transfer or disposal of property, rights or liabilities in pursuance of provisions contained in a franchise agreement shall be paid into the Consolidated Fund.'.—[Mr. Freeman.]

Brought up, read the First and Second time, and added to the Bill.

Orders of the Day — New clause 23

POWERS OF THE FRANCHISING DIRECTOR TO MAKE TRANSFER SCHEMES

'.—(1) The Franchising Director shall have power to make schemes for the transfer, at or after the end of the franchise period, of property, rights and liabilities which, immediately before the end of that period, are for the time being designated as franchise assets for the purposes of the franchise agreement in question to—
(a) the Franchising Director,
(b) a company which is wholly owned by the Franchising Director, or
(c) a franchise company.

(2) In the following provisions of this section—

(a) the "transferor" means the person from whom any such property, rights or liabilities as are mentioned in subsection (1) above are transferred by a scheme under this section: and
(b) the "transferee" means the person to whom any such property, rights or liabilities are so transferred.

(3) Subject to any contrary agreement or arrangements which may be made between the transferor and the transferee, where any property, rights or liabilities are transferred by a scheme under this section, there shall be paid by the transferee to the transferor or, as the case may require, by the transferor to the transferee, on the day on which the scheme comes into force such sums as may be specified in, or determined in accordance with, the franchise agreement mentioned in subsection (1) above.

(4) Subject to the following provisions of this Part, on the day on which a scheme under this section comes into force, the property, rights and liabilities affected by the scheme shall, subject to section 85 below, be transferred and vest by virtue of and in accordance with the scheme.

(5) Except as otherwise provided by this Act—
(a) any reference in this Act to a "transfer scheme" shall be taken as including a reference to a scheme under this section;


(b) in the application of any provision of this Act in relation to a scheme under this section, any reference to the "transfer date" shall be taken as a reference to the date on which the scheme comes into force.

(6) In this section "franchise agreement", "franchise period" and "designated as franchise assets" have the same meaning as they have in Part I above.

(7) Any sums required by the Franchising Director for the purpose of making payments in respect of property, rights or liabilities transferred by a scheme under this section shall be paid by the Secretary of State out of money provided by Parliament.

(8) Any sums received by the Franchising Director in respect of property, rights or liabilities so transferred shall be paid into the Consolidated Fund.'.—[Mr. Freeman.]

Brought up, read the First and Second time, and added to the Bill.

Orders of the Day — New clause 14

POWERS OF THE FRANCHISING DIRECTOR TO FORM AND FINANCE COMPANIES AND TO ACQUIRE AND DISPOSE OF ASSETS

'.—(1) The Franchising Director may form companies for the purpose of facilitating the performance of any functions assigned or transferred to him under or by virtue of this Act.

(2) The Franchising Director may—

(a) hold interests in any company which he forms as mentioned in subsection (1) above;
(b) exercise rights conferred by the holding of interests in any such company; and
(c) provide financial or other assistance to or in respect of any such company, including assistance by way of guarantee of its obligations.

(3) The Franchising Director may (whether by exercising his powers to make a transfer scheme or otherwise and whether or not for any consideration) acquire or dispose of any property, rights or liabilities which have been, or which are intended to be, designated as franchise assets by or under any franchise agreement.

(4) Any sums required by the Franchising Director for making payments in consequence of the exercise of any such powers as are mentioned in this section shall be paid by the Secretary of State out of money provided by Parliament.

(5) Any sums received by the Franchising Director in consequence of the exercise of any such powers as are mentioned in this section shall be paid into the Consolidated Fund.'.—[Mr. Freeman.]

Brought up, and read the First time.

Mr. Freeman: I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker: With this, it will be convenient to discuss at the same time the following: Government new clause 15—Performance of Franchising Director's duties to secure the provision of services etc.

Government new clause 21—Failure to secure subsequent franchise agreement.

Amendment (b) to new clause 21, leave out lines 9 to 11.

Government amendments Nos. 160, 113 to 117, 121, 119, 120, 118, 122, 125, 123, 124, 126, 130, 148, 178. 176,175, 71, 81 and 82.

Mr. Freeman: I will be brief but will explain the reasons for these amendments, which all relate to the franchising director's ability to form companies, to fulfil his duty—[.Interruption.]

Mr. Deputy Speaker: Order. I ask right hon. and hon. Members who are leaving the Chamber to do so quietly —and those remaining to give the Minister a fair hearing.

Mr. Freeman: I was saying, Mr. Deputy Speaker, that Government new clause 14 and the other new clauses grouped with it relate to the ability of the franchising director to form companies so that the franchising director is able to ensure the continuation of rail passenger services, in the event of the early termination of a franchise or when a subsequent franchise competition, after the first one, results in failure to let a new franchise.
The first time round, if there are no acceptable competing bids, British Rail continues to run the service. In the event of a closure having been proposed but not yet approved, the franchising director has to ensure the continuation of the services for the time being.
Government new clause 14 gives the franchising director powers to form and finance companies which will be wholly owned subsidiaries of the franchising director. The intention is that those companies should either themselves perform the service or contract with others to provide a rail passenger service. Government new clause 14 also gives powers to the franchising director to acquire and dispose of designated franchise assets. Our previous debate touched in part on the definition of designated franchise assets, including leased rolling stock.
Government new clause 15 enables the franchising director to perform his duties by securing the provision of services by agreement with others —for example, a neighbouring franchisee. The new clause gives the franchising director power to stipulate fares and, therefore, to control them.
Finally, Government new clause 21 places a duty on the franchising director to secure the continued provision of rail passenger services, except where he considers that there are satisfactory alternatives.

Mr. Wilson: I am sure that we could debate this new clause at great length and go over much of the ground that was covered in the last debate, but it is in nobody's interest to do so. Our views on the role of the franchising director have been set out, as have our concerns about the power that he is to be given—taking responsibility for many of these matters, the Government hope, at long arm's length from themselves. Therefore, I shall concentrate my remarks on Government new clause 21—"Failure to secure subsequent franchise agreement." This is a significant new clause. It is the basis upon which a large number of services would be removed over a number of years.
The key words in the new clause are
adequate alternative railway passenger services are available;".
The powers given by the new clause allow the franchising director to cease to provide services if, in his opinion, adequate alternative railway passenger services are available.
It is odd that the Government want to add this new clause to the Railways Bill. It deals specifically with circumstances where there are two operators running on the same routes. The most obvious example relates to those parts of the country where there are both InterCity services and Regional Railways services. That was the position on the routes to Blackpool, Clitheroe and a number of other places that have already lost their


InterCity direct services. Much more pertinently, the new clause covers those routes that will lose their direct routes, if this legislation is passed.
If I may make so bold as even to refer to the place in present company, Hull is an obvious example. The services to Aberdeen and Inverness on the east coast main line and the services to Penzance on the Great Western line are other obvious examples. The new clause provides a mechanism by means of which these services can be withdrawn.
Nobody doubts that when the franchises are drawn up and advertised, amid much ballyhoo, every station on the railway map as it is at present will be there. But that is not what is at issue. What is at issue is what happens thereafter within a relatively short space of time. Logic suggests that one of the things that will happen is that InterCity—although it is wrong to talk about an entity called "InterCity" because it will no longer exist—will start to rationalise its operations.
10.45 pm
The arguments should be familiar even if they are not. At present, InterCity is an extremely successful railway company. It is successful in that it records a small yearly profit. It does so on the basis of massive cross-subsidy within its own operations, but one of the Bill's specific purposes is to destroy InterCity and remove the possibility of cross-subsidy.
There is currently an entity called InterCity; from next April, there might be the coaches painted in the livery of InterCity and the name may even be used as a marketing device, but the entity itself will have been splintered, not so much to the four winds but to six different profit centres around the country.
I do not pretend to have any insights into the Tory mentality, but, for the life of me, I cannot understand why any Conservative Member, any more than a Labour Member, should regard it as a great wheeze to destroy InterCity. I should have thought that InterCity was something of which people could be reasonably proud—a profitable railway, which is unique in Europe in that respect. For all the abuse that is hurled at it and all the denigration of British Rail, InterCity in my experience provides an absolutely first-class service on the basis of being an integrated, highly motivated entity. In any event, InterCity is to go. It will be no more, but will be divided among six profit centres and a range of separate franchises.
When cross-subsidy is removed, each section of what is now InterCity will be left to its own devices. Some will depend directly on subsidy and a few will be profitable, but we all know that even those that are profitable are not profitable to the extent required by the private sector. The Minister for Transport in London helpfully confirmed that in Committee. I said that even the profit made on the east coast main line, which is by far the most profitable sector of the British Rail network because of the investment that has been put into it, was nothing like what the private sector would want. The Minister readily agreed and said that the private sector would of course he looking for a far higher return and would get it through entrepreneurial flair and better marketing.
I do not think that many people with two brain cells to rub together would accuse InterCity of being deficient in marketing ability. The idea that the east coast main line

will greatly increase its profits through better marketing is absurd. Every hon. Member knows that, but it is the basis on which InterCity is being broken up. What I have said applies to the most profitable route on the network, never mind the rest.
When the rubbish has been exposed and the east coast main line is not making the greatly enhanced profit which the Minister for Transport in London acknowledges will be required of it, the operators will be looking for other ways of increasing their profits. Even within the east coast main line, the Great Western line or some other sectors of InterCity, there is a great deal of cross-subsidy. It is an imprecise breakdown, but, by and large, where a route is electrified, it makes money, but because of the additional on-costs of diesel operation where the route is not electrified, it loses money. For example, the east coast main line is highly profitable overall, but north of Edinburgh it is a significant loss maker. In the case of the south-west, perhaps everything south-west of Plymouth is also a clear loss maker. Clearly, when a route is not making the required return, the operators or franchisees —if they ever exist—will look for ways of cutting or getting rid of loss-making routes.
Nobody has suggested that places will be left without train services. The proposition being put forward, which all common sense suggests is what will happen, is that instead of having a choice of direct services to London, there will be feeder services into InterCity at the point at which InterCity becomes profitable. That is exactly what happened at Blackpool, at Clitheroe and at Stranraer a couple of years ago. We are not talking about a far wider range of direct services being threatened.
I ask Conservative Members to study new clause 21 and to ask themselves what other conceivable reason there could be for including it in the Bill, apart from the reason that I have given. People would not lose their trains, but it would be reasonably argued that it was adequate for them to be able to get a train from Aberdeen to Edinburgh to join InterCity there, to get a train from Inverness to Glasgow to join InterCity there or to get a train from Penzance to Plymouth to join InterCity there. It would be argued that there would still be a service with no loss of frequency. However, crucially what would be lost would be direct services.
New clause 21 fits that scenario exactly. The franchising director will be given the power not to say that lines will be closed—nothing as dramatic as that—but to say that adequate alternative railway passenger services are available. The franchising director will not be able to say that adequate bus services are available, but that adequate railway passenger services are available. In other words, the only scenario in which new clause 21 is applicable is one in which there are at present two types of railway operations—Regional Railways and InterCity. InterCity will go and Regional Railways will be left with feeder services.
The proposal makes sense for many other reasons. At present, InterCity travels for nothing on the stretches of line about which I am talking because the costs are borne by Regional Railways. It is a fairly ad hoc arrangement, but essentially both InterCity and Regional Railways are part of British Rail. Although there already are subdivisions—ludicrous in my opinion—and cost apportionment within British Rail, the organisations are part of one operation. That will not be the case in the brave new


world that is envisaged. The operators will pay money to Railtrack and Railtrack will have a commercial imperative under the Bill to make a return from all operators.
Railtrack will not be able to say to InterCity, "You can ride for nothing and we shall put the entire burden of costs on to whichever ship that passes in the night happens to be running that sector of Regional Railways." There would be an outcry: "How can the guy who runs the Regional Railways sector make a profit when his competitor, InterCity, is riding on the tracks for nothing? "That would not be sustainable. However, the moment that one says that Railtrack will charge InterCity or its successor for operating on the tracks, one increases another burden, which is why those services will not be there for very long.
New clause 21 will chop down the branches of InterCity, as experience will show. I do not expect much from most Conservative Members, although I expect a lot from some of them. I suggest that any Conservative Members who have an area served by InterCity which is a loss-making part of the InterCity network at present should look closely at new clause 21. If they can find a better explanation for giving the franchising director the right to cease to provide passenger services if, in his opinion, adequate alternative railway services are available, I should be interested to hear it.

Mr. James Wallace: Like the hon. Member for Cunninghame, North (Mr. Wilson), I think that new clause 21 is well worth examination. I also draw the House's attention to amendment (b), which stands in the name of my hon. Friend the Member for North Devon (Mr. Harvey), myself and others of my hon. Friends.
The House is aware of the Government's prime argument for the Bill—that it introduces competition into the railway system. They say that it will lead to customers becoming winners, through lower costs, greater frequency and reliability of trains and a better overall service. That view has clearly been challenged. The key to better performance is not an argument over ownership; it is the key question of investment.
We believe that privatisation is a smoke screen for the Government to hide behind and so avoid the charge of inadequate investment. New clause 21 is a classic example of such a smoke screen. On the face of it, it appears that the Government are trying to do something positive and helpful. It is a good longstop or safety net. If the franchisee ends the agreement, the franchising director will have a duty to secure the provision of the services that were secured under the franchise agreement until there is time for a new franchise agreement to be provided.
The rub comes in the phrase in new clause 21:
subject to subsection (2) below".
According to new clause 21 (2)(a), the franchising director does not have to
secure that provision of any services, if and to the extent that, in his opinion, adequate alternative railway passenger services are available.
The hon. Member for Cunninghame, North has already described how that could be used to strip away the uneconomical parts of the InterCity service and to provide connecting feeder services that would downgrade many parts of the network.
That exemption and means of relieving the franchising director of a duty reduces competition. Far from promoting competition, it allows a service to be eliminated. Read in conjunction with clause 5, where the franchising director is required to follow the instructions of the Secretary of State, it is clear that services can he withdrawn, although at arms length so that the Government do not get their hands dirty. That is what the franchising director would be required to do.
Despite the rhetoric of competition and improved customer service, the effect of the new clause 21 would be to reduce services. That could apply in many places. The service between Carlisle and Glasgow is the main line from Carlisle to Lockerbie and Carstairs to Glasgow. The other line runs through Annan. Dumfries and Kilmarnock. That line provides a very important service, but it might be challenged with regard to new clause 21.
Scottish Members and Members in the north of England are concerned about how new clause 21 might place a question mark over the key connection of the west coast main line from London to Glasgow. Increasingly, that line is seen to be in competition with the east coast main line in respect of the number of trains linking through Edinburgh into Glasgow.
As the Select Committee on Scottish Affairs was recently informed, in European terms, the west coast main line is the third most important line in terms of traffic flow. The west coast main line and the east coast main line to Edinburgh are key arterial rail routes for Scotland. In its

submission to the Select Committee, the CBI in Scotland stated that the "priority" in the rail privatisation exercise was to secure the
preservation of the East and West Coast Main Lines".
In its evidence to the Scottish Affairs Select Committee, the Department of Transport conceded that the west coast main line was
vital not just to Scotland's needs, but to that part of England through which it runs".
A survey of businesses in Carlisle carried out by Carlisle city council found that when 91 businesses were asked about rail issues, they stated that the priority to them was the upgrading and improvement of the west coast main line.

Ms Liz Lynne: Does my hon. Friend also accept that it is vital for areas like mine and for the rest of the north-west that the west coast main line is protected? If we do not have money for that line and the Government use that as an excuse to run down the west coast main line by saying that the east coast main line will take the traffic, my constituency and many other constituencies in the north-west will suffer.

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Mr. Wallace: I endorse my hon. Friend's comments. It is not only a Scottish fear. It is a fear in many parts of the north-west of England. The west coast main line links five key conurbations—Greater London, the west midlands, Greater Manchester, Merseyside and Clydeside. Those are important links for the commercial and economic well-being of not only Scotland but of the whole United Kingdom. In addition, there are links into the west coast main line from north Wales, the Fylde coast, Cumbria, the Lake District and the south of Scotland.
So the west coast main line is a key line. We argue that it has been starved of necessary investment in the past 20 years since electrification was completed in 1974. There is a problem of underinvestment which gives rise to fears. The hon. Member for Cunninghame, North said that there could be a direct service from Glasgow to London, with routes feeding into that. It could be worse than that. Inter-city services could stop at Preston with only a regional route going to Carlisle.
That begs the question of what would happen to a station such as Lockerbie. I understand that in the previous debate my right hon. Friend the Member for Berwick-upon-Tweed (Mr. Beith) noted that Dunbar could no longer be served by ScotRail. According to the map of the franchise for ScotRail, Lockerbie would not be allowed to have a service provided by ScotRail. If the inter-city service excluded Lockerbie, what would happen to that important station for the south of Scotland?
I remember standing on a crowded Lockerbie station waiting for the train to Edinburgh on many Sunday evenings when I was a student. I understand from local sources that it is still a busy station. Potentially no provision is made for it. There is a need for investment in locomotives and carriages and to improve the reliability of the track and timetabling. In all those matters, the west coast main line has lagged behind the east coast main line.
The trains and carriages on the west coast main line are mostly of a 1970s design. Even if the track were improved to allow greater speed, I understand that the trains and carriages would not allow it. Last year the tendering arrangements for a substantial investment by British Rail


in new carriages and trains for the west coast main line were allowed to lapse because the resources were not there. BR was starved of resources and was unable to go ahead with that necessary investment.
The line is also in urgent need of investment to improve track and signalling systems. In a British Rail document which came into the public domain in February this year it was stated that, in addition to all the other investments, between £3 million and £5 million per annum would be needed every year until 2000 to restore signalling and telecommunications. It said that the track between Carlisle and Gretna in particular was in need of resignalling on safety grounds.
We have poor rolling stock, a poor state of track and increasingly a limit on the high-speed performance of trains on the west coast main line, so it is less competitive than the east coast main line. A cursory look at the timetable shows that the Scottish Pullman takes four and a quarter hours from King's Cross to Edinburgh while the Royal Scot takes one minute short of five hours from Euston to Glasgow. What private company would be prepared to take on the London to Glasgow west coast franchise in the face of fierce competition from the east coast, especially when it is not allowed to compete on level terms?
Paragraph 45 of the Scottish Select Committee report said:
We wish to see the plan to invest £750 million in track improvements and new rolling stock implemented as soon as possible. This upgrading must not be delayed by uncertainties about rail privatisation and the transfer of responsibility to Railtrack.
That view is certainly endorsed by Opposition Members. I hope that it will also find favour with Conservative Members who also want to see an improved rail network.
Investment is needed to improve and secure quality, enhance safety, reduce operating and maintenance costs, to be more environmentally reliable and, through the improvement of consumer choice, to increase usage and revenue. Investment, not the form of ownership, is the key to providing more effective competition and securing a better service for the customer. We believe that new clause 21(12)(a) is a Trojan horse which could be used to eliminate lines and reduce competition. I hope that the House will support the amendment which my hon. Friends and I have tabled to the new clause.

Mr. Snape: Like earlier speakers, I am concerned about new clause 21(2)(a).
First, there is the competition—if that is the right word—between the west and east coast main lines. As the hon. Member for Orkney and Shetland (Mr. Wallace) reminded us, since the completion of the electrification of the west coast line in the mid-1970s there has been little investment in the route, if any: indeed, the service has slowed down by about 35 minutes since the stretch from Weaver junction northwards to Glasgow was electrified. As for the service in other north-western cities, the service between Manchester and Glasgow is no more punctual now than it was in the days of steam. Such a franchise would not prove particularly attractive—to say the least —to any private operator.
There is an investment problem on the west coast main line, and the sooner that problem is tackled, the better; but many of us feel that it will not be tackled by the Bill, which —if anything—is likely to dissuade investors rather than attracting them.
My hon. Friend the Member for Cunninghame, North (Mr. Wilson) mentioned towns that are currently served by both Regional Railways and InterCity. As he said, the Government propose the fragmentation of the InterCity network. Where that has already happened, InterCity is withdrawing, leaving Regional Railways to provide the only service between, for instance, Blackpool and Preston —where the InterCity service was recently withdrawn—and Wolverhampton and Shrewsbury, in the west midlands area.
It is an open secret that British Rail want to withdraw InterCity services completely, in the short term, from cities such as Hull: my hon. Friend the Member for Cunninghame, North referred to the recent whittling away of that service. But the Bill will not only affect the towns and cities currently served by both InterCity and Regional Railways. I ask the Minister to consider the service between, say, Birmingham and Stratford in the context of new clause 21(2)(a). At present, two services exist, both supported by the passenger transport executive: one runs via Solihull, the other via Shirley.
Let us suppose that there are two separate franchisees, one of which decides not to renew the franchise or to withdraw the service. Would the franchise director be right in saying that, as another service exists—let us say that the service via Solihull remains—
adequate alternative railway passenger services are available"?
He might well point out that the distance by road between Solihull and Shirley was five or six miles and that there was a bus service connecting the two points. One rail service still exists; is it adequate, in the terms of the new clause?
A couple of weeks ago, Birmingham Snowhill station —in the same part of the world—was reconnected with London for the first time in 30 years. The Network SouthEast Chiltern line turbo train service was extended to Birmingham Snowhill and there is now a two-hourly service via Solihull. It is difficult to imagine such a franchise being considered particularly attractive once the various sections of the railway network are up for grabs; but let us suppose that someone bids for that franchise and decides after a while to cut the turbo service to Banbury, Bicester or another point on the Marylebone line. Passengers in Solihull who wish to travel by rail normally drive five or six miles up the M42 to Birmingham International station to catch the service running between Wolverhampton, Birmingham and Euston. Could not the franchising director decide that, as that service presumably still exists, it should be regarded as an adequate railway passenger service under the terms of the Bill?
Problems will arise not only in relation to cities that are currently served by two different segments of a nationalised railway system, but in relation to those services that I have just described and similar services in other parts of the country. Will the Minister give a straight answer? What will the franchise director regard as an adequate alternative passenger railway service? Will it be a service of the sort that I have described, or will there be even greater safeguards?
The Minister referred to the franchise director's duty to guarantee future rail services. During the previous debate the hon. Member for Keighley (Mr. Waller) asked how he or she was to fulfil that duty. In repeating that question I shall outline a scenario which is not beyond the realms of possibility under the terms of the legislation. A franchisee could go bust quickly—as people do—owing a great deal


of money. That has happened to hundreds of thousands of businesses since the present Administration were elected. People to whom money is owed will seek to recover that money by the sale of the franchisee's assets, whatever they may be. How can the Minister say that, the day after a franchisee goes bust, British Rail or someone else will come to operate those services?
Trains are not like buses; it is not practical to pluck a driver off the street, put him behind the controls of any train and say, "Drive from A to B." Drivers have to know every inch of the route, the signalling system, the bends and the speed restrictions. It is not possible to stop a train in the same way as a bus—it takes weeks, sometimes months, to train drivers on a specific route. How can the Minister say that in the event of a franchisee going bust it is the franchise director's duty to find an alternative operator? How could such a duty be discharged?
Today, the length of an individual route is often controlled by a signal box—to use more modern parlance, a signalling centre. In the event of a franchisee going bust, who negotiates the signalling of that route with the new franchisee, assuming that such an alternative franchisee exists?
The reasoning behind the new clause and others in the group is flawed because it has been drafted on behalf of politicians who believe only in ideology and have failed to look in depth at the problems that will arise if the scenario —which is by no means unlikely—occurs. The Minister will have to come up with better arguments to persuade most Opposition Members that the group of amendments is feasible. I hope that some of the more thoughtful Conservative Members will express the reservations that my hon. Friends and I have expressed.

Mr. Dickens: The new clause is a safety valve which is central to the Bill. In the unlikely event of a franchisee dropping out, the franchising director can step in to ensure that all our constituents enjoy a proper rail service while a new franchise arrangement is created. That seems to be common sense.
Earlier, many hon. Members talked about profit being a dirty word and higher fares being the only way to create profit. They could not be more wrong. If there is a sensible level of fares, clean comfortable trains running on time with good facilities on them and a package of concessions to make it attractive, people will start to move off the overcrowded roads. We are doing that with freight to Europe and we should do it with passengers all over the country. We should get cars off the roads and people on to trains. However, people will get on trains only is if there is a sensible level of fares and sensible arrangements.
That is the essence of creating a profit. The profit is then ploughed back in. We have ploughed the profits back into many other privatised industries and they have improved to the point at which they are the wonderful industries that we have today. In the old days, we shovelled millions of pounds into a bottomless pit—into nationalised industries —and we never got anything for it except misery all the time.
The Bill is important. New clause 14 is a safety valve to ensure that we keep trains running to our constituencies in the unlikely event of a franchisee dropping out. It is sheer

common sense. I cannot understand why any hon. Member would want to vote against something that is a safeguard.

Mr. Gunnell: I shall resist the temptation to respond to the speech of the hon. Member for Littleborough and Saddleworth (Mr. Dickens). He shows even more faith than the Conservative Members on the Standing Committee that considered the Bill.
I shall simply ask the Minister two questions. On clause 21, many of the services that will be franchised will be those on which the passenger transport authority and the passenger transport executive have been involved in discussions. If clause 21 becomes operative and there is a failure to provide a sequential franchise, what will be the involvement of the PTA and the PTE at that point? That is not spelt out, but the passenger transport authorities need to be clear about it.
On new clause 14, is it anticipated that, perhaps in securing railway investment, the frachising director will form a finance company to finance, for example, the purchase of rolling stock? If so, and given the powers provided in new clause 18, will it be in order for the franchising director to form a company jointly with perhaps several passenger transport authorities to secure investment in rolling stock?

Mr. Denham: I almost hesitated to raise an example of another route that might be hit by new clause 21? It struck me that, when new clause 21 was being drafted, there must have been a moment at which either the Minister turned to his civil servants and said, "Why don't we put this in new clause 21" and the civil servant said, "What do you have in mind, Minister? What about so and so?", or the civil servants came to the Minister and said, "We think you should put this in new clause 21" and he said, "What do you have in mind? What about such and such a route?"
We have heard speculation about whether the franchising director will say that the east coast route is a satisfactory substitute for the west coast route or vice versa. I have a specific constituency interest to which I referred several times during the Standing Committee deliberations. There is an InterCity route that normally runs from Poole to the north-west—to Manchester—or the north-east. I understand that it is one of the loss-making parts of InterCity. Therefore, it will lose the cross-subsidy from the east coast line when that is privatised.
Most, though perhaps not all, of the stations on the InterCity route from Poole through my constituency can be reached by alternative routes via London. It is usually quicker to go via London, but more expensive under current arrangements. There is a fair degree of passenger choice because people can decide whether to break the journey by travelling via London, spending more and taking less time, or have a longer more roundabout journey.
I said several times in Committee that the cross-country route from Poole is likely to be threatened by the new franchising regime. That is because it will require a subsidy and BR and the Central Transport Consultative Committee have told us in briefings in the past 24 to 48 hours that there is still great uncertainty about whether there will be enough money in the system to subsidise those routes. Any future francisee running that cross-country


route runs a high chance of failing to provide a service or he may decide to withdraw after the initial franchise period.
Does the Minister envisage the alternative routes through London as satisfactory, adequate or acceptable substitutes for the current InterCity route from Poole through Southampton to the north-west and the north-east? It is reasonable to ask the Minister that question because every hon. Member knows that when the framework is in place and the system is operating, complaints about decisions of the franchising director will be met by the Minister or his successor saying, "It has nothing to do with us, guy. It is the responsibility of the franchising director. That is the way Parliament set up the system." This is our only opportunity to ask the Minister what he had in mind with new clause 21.
It is reasonable for hon. Members to name specific routes and ask the Minister whether he decided that they would be acceptable alternatives. The Minister must know the acceptable alternatives, or he would not have used the term in the legislation. Which routes had he in mind when he agreed with his advisers to put that in the Bill?

Mr. Freeman: Six issues have been raised and I shall try to deal with them succinctly. The hon. Member for Cunninghame, North (Mr. Wilson) spoke about InterCity. I confirm that we want the brand name to continue because there is no reason why it should be inconsistent with the separate management of the individual routes. There will be further discussions with Mr. Christopher Green, who is responsible for running InterCity I pay tribute to Mr. Green and his managers for what they have achieved. InterCity has been a success story over the past 10 years and it can do better. It needs more investment in rolling stock, especially on the west coast main line, the Great Western line and the midland main line when it is eventually electrified.
The franchising of InterCity services will be based on the whole timetable, including services to Penzance, Inverness and Aberdeen, immediately before the franchise is let. That will apply to all the services and stations served by that InterCity line. The amendments are not about chopping InterCity branches. We want InterCity to thrive.
I agree with the hon. Member for West Bromwich, East (Mr. Snape) that considerable investment is required on the west coast main line; perhaps up to £500 million on the infrastructure and £300 million on rolling stock. If the £150 million worth of new leasing facilities is used on the west coast main line, that would be a start. If not, I assure the hon. Gentleman, as I have already assured the House, that as soon as British Rail makes its mind up on the use of that £150 million facility, we will work with it on the route where that money is not used to devise a proper operating lease which meets the Treasury guidelines. If a satisfactory lease is drawn up, even more investment can be made. We want the west and east coast main lines to be thriving, because we want choice and competition. There is no hidden agenda to end services north of Preston on the west coast main line.
The hon. Member for West Bromwich, East also asked what would happen should a franchisee go bust. We amended the Bill in Committee to provide for railway administrative orders. They are unique because they enable the franchising director, with the assistance of the courts, to step in to ensure the continued provision of railway services. That is quite unlike the arrangements for

any other form of transportation or any other company. It will not happen that a franchisee will be in financial difficulties on a Sunday and the trains will not run on Monday. We spent considerable time developing the new concept of railway administration orders to deal specifically with that problem.
The hon. Member for Morley and Leeds, South (Mr. Gunnell) asked whether the passenger transport executive would have a continuing role should the franchising director not renew a franchise. The answer is yes. If the hon. Gentleman studies clause 29, he will discover that it offers provision on that score. If he is not satisfied, perhaps he would write to me. The hon. Gentleman also raised the interesting idea of a joint company being formed between the franchising director and the passenger transport executive to own rolling stock. I shall certainly consider that suggestion, which is consistent with our desire that the franchising director, the PTE, the franchisee and the lessor should be tied together, by legal agreement, for the provision of new rolling stock.
The hon. Member for Southampton, Itchen (Mr. Denham) asked about cross-country services. We want to franchise all railways that are run—that is our intention. When we come to franchise the InterCity cross-country services, the same principle will apply. We will take the entire service offered and franchise it. We have not yet been specific about cross-country services, or the central division of Regional Railways, because, as the hon. Gentleman is aware, Regional Railways, and, to some extent, cross-country services, are run on artificial boundaries. We want to ensure that we provide the right geographic description or boundary of specific services. There is no hidden agenda for the cessation of cross-country services. They are part of the present pattern of railway services and we intend to franchise those lines.
It is important to consider the purpose of the new clause. Today, my right hon. Friend has announced 26 fairly large franchises. If a franchise comes to an end, it does not mean that the franchising director must look at alternatives. That is not possible when one considers the east coast main line, the London-Tilbury-Southend line or lines to Wales and the south-west. We are discussing large franchises.
Where open-access services are developed in the coming years, they may provide a satisfactory, unsubsidised, unfranchised service. The franchising director might consider that those routes—perhaps they would operate in those parts of the country to which reference has already been made—provide a satisfactory service. It might then be considered unnecessary to franchise that part of a much larger franchise.

Mr. Wallace: I welcome the fact that the Minister said that he wanted the west coast main line, as well as that on the east coast, to be successful. How is that likely to happen, given that the line will be starved of investment? The £150 million that the Minister mentioned represents about one third of the tender price for new rolling stock on the west coast main line, a tender which British Rail had to allow to lapse last year. How does he expect that line to be successful if it does not have the investment to allow that to happen?

Mr. Freeman: The hon. Gentleman will appreciate that British Rail, Railtrack and the successor franchisees cannot do everything at once. The east coast main line has


benefited from a successful investment project worth up to £450 million. Network SouthEast has benefited from upwards of £700 million of investment on the Kent link. Attention must now be turned to the west coast main line. We have announced that the private sector has put forward propositions to improve the infrastructure. The private sector, working with the public sector, can help to advance the date of completion of works. Already, British Rail plans to start soon on resignalling the west coast main line, and I welcome that. I am determined that new, modern rolling stock should come on to that line, which is the premier line in Britain's railway infrastructure, as soon as possible.

Mr. Prescott: That is a sound bite.

Mr. Freeman: It is not a sound bite, it is the truth. The west coast main line is our most important rail artery. Its services will continue to run to Glasgow and north of Glasgow. Investment is coming to the line and privatisation will advance that. I commend the new clause to the House.

Mr. Wilson: That is a good saying: "It is not a sound bite, it is the truth." That may be the first confession by a politician that the two are incompatible.
Two of the Minister's statements cannot be allowed to go unchecked. He said that InterCity was a success. In that case, why not leave it alone and let it develop? He then said that he could confirm that the Government want the brand name to continue. InterCity is not a shell. It is not livery and a brand name. It is not a marketing concept alone. It is about people who have worked hard to make it what it is—a profitable railway company. Why cannot it be left to do that job, dependent as it is on internal cross-subsidy?
The Minister did not give us one rational reason for separating from InterCity the profitable elements so as to create, overnight, a whole new railway that will have to be subsidised if it is to survive in anything like its present form. Where is the virtue in that? I cannot see where that comes from in my philosophy and I find it odd that it is part of Tory philosophy to create new businesses that are dependent on public subsidy instead of profitable ones that stand on their own feet.
The Minister told us that the new clause was based on a hypothesis of future open access. I doubt whether anyone believes that we shall ever see the open access proposals come to fruition, but if this is to do with open access, such a provision could be written into existing clauses. The new clause is far too convenient for the Government, because they are getting a device by which InterCity routes can be pruned, to be replaced by feeder services. It distresses and disappoints me that not one Tory Member representing the areas that will be threatened by the clause has got to his feet to lodge concerns which, at the very least, are justified by inclusion of the clause in the Bill.

Question put, That the clause be read a Second time:—

The House divided: Ayes 214, Noes 109.

Division No. 280]
[11.33 pm


AYES


Ainsworth, Peter (East Surrey)
Gallie, Phil


Aitken, Jonathan
Gill, Christopher


Alexander, Richard
Gillan, Cheryl


Alison, Rt Hon Michael (Selby)
Goodson-Wickes, Dr Charles


Amess, David
Gorman, Mrs Teresa


Ancram, Michael
Greenway, John (Ryedale)


Arbuthnot, James
Griffiths, Peter (Portsmouth, N)


Arnold, Jacques (Gravesham)
Hague, William


Arnold, Sir Thomas (Hazel Grv)
Hamilton, Rt Hon Archie (Epsom)


Atkinson, David (Bour'mouth E)
Hamilton, Neil (Tatton)


Atkinson, Peter (Hexham)
Hannam, Sir John


Baker, Nicholas (Dorset North)
Hargreaves, Andrew


Baldry, Tony
Harris, David


Banks, Matthew (Southport)
Haselhurst, Alan


Banks, Robert (Harrogate)
Hawksley, Warren


Bates, Michael
Heald. Oliver


Bellingham, Henry
Heathcoat-Amory, David


Beresford, Sir Paul
Hendry, Charles


Biffen, Rt Hon John
Hill, James (Southampton Test)


Blackburn, Dr John G.
Horam, John


Booth, Hartley
Howarth, Alan (Strat'rd-on-A)


Bottomley, Peter (Eltham)
Howell, Rt Hon David (G'dford)


Bottomley, Rt Hon Virginia
Hughes Robert G. (Harrow W)


Bowden, Andrew
Hunt, Rt Hon David (Wirral W)


Bowis, John
Hunt, Sir John (Ravensbourne)


Brandreth, Gyles
Jack, Michael


Brazier, Julian
Jenkin, Bernard


Bright, Graham
Jessel, Toby


Brooke, Rt Hon Peter
Jones, Gwilym (Cardiff N)


Brown, M. (Brigg &amp; Cl'thorpes)
Jones, Robert B. (W Hertfdshr)


Browning, Mrs. Angela
Kellett-Bowman, Dame Elaine


Budgen, Nicholas
Kilfedder, Sir James


Burns, Simon
King, Rt Hon Tom


Burt, Alistair
Kirkhope, Timothy


Butterfill, John
Knapman, Roger


Carlisle, Kenneth (Lincoln)
Knight, Greg (Derby N)


Carrington, Matthew
Knox, David


Carttiss, Michael
Kynoch, George (Kincardine)


Cash, William
Lait, Mrs Jacqui


Channon, Rt Hon Paul
Lang, Rt Hon Ian


Chapman, Sydney
Lawrence, Sir Ivan


Clappison, James
Legg, Barry


Clark, Dr Michael (Rochford)
Lester, Jim (Broxtowe)


Clarke, Rt Hon Kenneth (Ruclif)
Lidington, David


Clifton-Brown, Geoffrey
Lightbown, David


Coe, Sebastian
Lilley, Rt Hon Peter


Congdon, David
Lloyd, Peter (Fareham)


Coombs, Anthony (Wyre For'st)
Lord, Michael


Coombs, Simon (Swindon)
Luff, Peter


Cope, Rt Hon Sir John
Lyell, Rt Hon Sir Nicholas


Couchman, James
MacGregor, Rt Hon John


Cran, James
Maclean, David


Davies, Quentin (Stamford)
McLoughlin, Patrick


Davis, David (Boothferry)
Maitland, Lady Olga


Day, Stephen
Malone, Gerald


Dickens, Geoffrey
Mans, Keith


Dorrell, Stephen
Marlow, Tony


Douglas-Hamilton, Lord James
Martin, David (Portsmouth S)


Dover, Den
Mawhinney, Dr Brian


Duncan, Alan
Merchant, Piers


Duncan-Smith, Iain
Milligan, Stephen


Dykes, Hugh
Mills, Iain


Elletson, Harold
Mitchell, Sir David (Hants NW)


Emery, Rt Hon Sir Peter
Moate, Sir Roger


Evans, Jonathan (Brecon)
Monro, Sir Hector


Evans, Roger (Monmouth)
Montgomery, Sir Fergus


Faber, David
Moss, Malcolm


Fabricant, Michael
Needham, Richard


Fenner, Dame Peggy
Neubert, Sir Michael


Fishburn, Dudley
Nicholls, Patrick


Forman, Nigel
Nicholson, David (Taunton)


Forsyth, Michael (Stirling)
Nicholson, Emma (Devon West)


Fowler, Rt Hon Sir Norman
Norris, Steve


Fox, Dr Liam (Woodspring)
Oppenheim, Phillip


Freeman, Roger
Paice, James


French, Douglas
Patnick, Irvine


Gale, Roger
Pattie, Rt Hon Sir Geoffrey






Pickles, Eric
Stewart, Allan


Porter, David (Waveney)
Sweeney, Walter


Rathbone, Tim
Sykes, John


Redwood, John
Taylor, Ian (Esher)


Renton, Rt Hon Tim
Taylor, John M. (Solihull)


Richards, Rod
Thomason, Roy


Riddick, Graham
Thompson, Sir Donald (C'er V)


Robathan, Andrew
Thompson, Patrick (Norwich N)


Roberts, Rt Hon Sir Wyn
Thurnham, Peter


Robertson, Raymond (Ab'd'n S)
Townend, John (Bridlington)


Robinson, Mark (Somerton)
Townsend, Cyril D. (Bexl'yh'th)


Roe, Mrs Marion (Broxbourne)
Trend, Michael


Rowe, Andrew (Mid Kent)
Trotter, Neville


Rumbold, Rt Hon Dame Angela
Twinn, Dr Ian


Ryder, Rt Hon Richard
Vaughan, Sir Gerard


Sainsbury, Rt Hon Tim
Waller, Gary


Shaw, David (Dover)
Wardle, Charles (Bexhill)


Shephard, Rt Hon Gillian
Waterson, Nigel


Shepherd, Colin (Hereford)
Wells, Bowen


Smith, Sir Dudley (Warwick)
Wheeler, Rt Hon Sir John


Smith, Tim (Beaconsfield)
Whittingdale, John


Soames, Nicholas
Widdecombe, Ann


Speed, Sir Keith
Wilkinson, John


Spencer, Sir Derek
Willetts, David


Spicer, Sir James (W Dorset)
Wolfson, Mark


Spicer, Michael (S Worcs)
Wood, Timothy


Spink, Dr Robert
Yeo, Tim


Sproat, Iain
Young, Sir George (Acton)


Squire, Robin (Hornchurch)



Stanley, Rt Hon Sir John
Tellers for the Ayes:


Stephen, Michael
Mr. Andrew Mackinlay and Mr. Andrew Mitchell.


Stern, Michael





NOES


Ainger, Nick
Hoon, Geoffrey


Banks, Tony (Newham NW)
Howarth, George (Knowsley N)


Barnes, Harry
Hughes, Kevin (Doncaster N)


Beith, Rt Hon A. J.
Hughes, Robert (Aberdeen N)


Benton, Joe
Hughes, Simon (Southwark)


Betts, Clive
Hutton, John


Boyce, Jimmy
Illsley, Eric


Bradley, Keith
Jackson, Glenda (H'stead)


Brown, Gordon (Dunfermline E)
Jones, Barry (Alyn and D'side)


Brown, N, (N'c'tle upon Tyne E)
Jones, Ieuan Wyn (Ynys Môn)


Campbell, Mrs Anne (C'bridge)
Jones, Lynne (B'ham S O)


Campbell, Menzies (Fife NE)
Kilfoyle, Peter


Cann, Jamie
Kinnock, Rt Hon Neil (Islwyn)


Chisholm, Malcolm
Kirkwood, Archy


Clarke, Eric (Midlothian)
Lloyd, Tony (Stretford)


Clelland, David
Llwyd, Elfyn


Coffey, Ann
Loyden, Eddie


Cohen, Harry
Lynne, Ms Liz


Cousins, Jim
McCartney, Ian


Cryer, Bob
McMaster, Gordon


Cunliffe, Lawrence
Mahon, Alice


Cunningham, Jim (Covy SE)
Marek, Dr John


Dafis, Cynog
Michael, Alun


Dalyell, Tam
Michie, Mrs Ray (Argyll Bute)


Davis, Terry (B'ham, H'dge H'l)
Milburn, Alan


Denham, John
Miller, Andrew


Dixon, Don
Morgan, Rhodri


Donohoe, Brian H.
Morley, Elliot


Dunwoody, Mrs Gwyneth
Mowlam, Marjorie


Etherington, Bill
Mudie, George


Foster, Rt Hon Derek
O'Brien, Michael (N W'kshire)


Fraser, John
Parry, Robert


Galbraith, Sam
Pendry, Tom


Gerrard, Neil
Pickthall, Colin


Godman, Dr Norman A.
Pike, Peter L.


Graham, Thomas
Powell, Ray (Ogmore)


Griffiths, Nigel (Edinburgh S)
Prescott, John


Griffiths, Win (Bridgend)
Primarolo, Dawn


Gunnell, John
Purchase, Ken


Hall, Mike
Reid, Dr John


Hanson, David
Rendel, David


Hardy, Peter
Robertson, George (Hamilton)


Harvey, Nick
Rowlands, Ted


Heppell, John
Salmond, Alex


Hill, Keith (Streatham)
Sheerman, Barry


Hinchliffe, David
Simpson, Alan





Skinner, Dennis
Wallace, James


Snape, Peter
Walley, Joan


Spearing, Nigel
Wigley, Dafydd


Spellar, John
Wilson, Brian


Steel, Rt Hon Sir David
Winnick, David


Stott, Roger
Wray, Jimmy


Strang, Dr. Gavin



Taylor, Matthew (Truro)
Tellers for the Noes:


Turner, Dennis
Mr. Hugh Bayley and Mr. Alan Meale.


Tyler, Paul



Vaz, Keith

Question accordingly agreed to.

Clause read a Second time, and added to the Bill.

Orders of the Day — New clause 15

PERFORMANCE OF FRANCHISING DIRECTOR'S DUTIES TO SECURE THE PROVISION OF SERVICES ETC.

'.—(1) Where the Franchising Director is under a duty to secure the provision of any services or the operation of the whole or any part of a network, station or light maintenance depot, he may perform that duty by entering into agreements or arrangements under which other persons (in this section referred to as "sub-contractors") are to provide the services or, as the case may be, operate the network, station or light maintenance depot, or the part of the network, station or light maintenance depot, in question.
(2) The Franchising Director may enter into an agreement or arrangement such as is mentioned in subsection (1) above notwithstanding that the sub-contractor in question is a company which is wholly owned by the Franchising Director.
(3) Any agreement or arrangement such as is mentioned in subsection (1) above may include such provisions, including provision with respect to the fares or other charges that may be imposed by the sub-contractor in question, as the Franchising Director may think fit.
(4) Any sums required by the Franchising Director for the purpose of performing any such duty as is mentioned in subsection (1) above shall be paid by the Secretary of State out of money provided by Parliament.
(5) Any sums received by the Franchising Director in consequence of the performance of any such duty as is mentioned in subsection (1) above shall be paid into the Consolidated Fund.'.—[Mr. MacGregor.]

Brought up, read the First and Second time, and added to the Bill.

Orders of the Day — New clause 21

FAILURE TO SECURE SUBSEQUENT FRANCHISE AGREEMENT

'.—(1) In any case where—
(a) a franchise agreement is terminated or otherwise comes to an end, but
(b) no further franchise agreement has been entered into in respect of services formerly provided under that franchise agreement,
it shall, subject to subsection (2) below, be the duty of the Franchising Director to secure the provision of those services until such time as they again begin to be provided under a franchise agreement.

(2) Subsection (1) above does not—
(a) require the Franchising Director to secure the provision of any services, if and to the extent that, in his opinion, adequate alternative railway passenger services are available;
(b) preclude him from giving notice under subsection (3) of section 33 below in relation to any of the services in question, in which case his duty under this section to secure the provision of the services to which the notice relates will (subject to subsections (3) and (4) of that section) terminate on the day specified in the notice in pursuance of paragraph (b) of that subsection; or


(c) preclude him from ceasing to secure the provision of any of the services in question, if the discontinuance is certified by the Regulator as being a minor closure, within the meaning of that section.'.—[Mr. MacGregor.]

Brought up, read the First and Second time, and added to the Bill.

Orders of the Day — New clause 17

PAYMENTS BY THE SECRETARY OF STATE IN RESPECT OF TRACK ACCESS CHARGES IN CONNECTION WITH RAILWAY GOODS SERVICES

'.—(1) The Secretary of State may, for the purpose of securing the provision of adequate services for the carriage of goods by railway, enter into agreements with goods service operators under which he undertakes to make payments to the goods service operator in question in respect of all or any part of the track access charges which may be incurred by the goods service operator in connection with the provision of the services to which the agreement relates.

(2) The Secretary of State shall not enter into an agreement by virtue of subsection (1) above unless he is satisfied that benefits of a social or environmental nature are likely to result from the provision of those services for the carriage of goods by railway to which the agreement relates.

(3) Any sums required by the Secretary of State for making payments under agreements entered into by virtue of this section shall be paid out of money provided by Parliament.

(4) In this section—
goods service operator" means a person who operates services for the carriage of goods by railway;
track access charge" means any payment required to be made under an access agreement conferring a right to use track;
and expressions used in this section and in Part I above have the same meaning in this section as they have in that Part.'.—[Mr. MacGregor.]

Brought up, and read the First time.

Mr. MacGregor: I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker: With this, it will be convenient to discuss also Government amendment No. 73.

Mr. MacGregor: This is the only Report stage debate on freight, and at this hour of night I will be brief. It is unfortunate that we could not have had the debate earlier, because the freight aspects of our proposals are most important. Our purpose is to deal with an issue that has faced nearly every country around the world. Over the years, the volume of freight taken on rail as a proportion of inland freight has markedly declined. We are not unusual in that. Last week, I published the Government's proposals on "Rail Freight Privatisation", which on page 5 presents a table that shows the share of freight moved by rail compared with other modes.
In Great Britain the figure is 7·2 per cent.; in France, 8·5 per cent.; western Germany, 8·7 per cent.; the Netherlands, 2·5 per cent.; Belgium, 12·7 per cent.; and Spain, 2·4 per cent. Although those figures do not show the movement over the years, they clearly indicate that rail freight accounts for a small proportion of the total. The Government's objective is to halt that decline and to move freight back on to rail.
There are three major reasons for that trend. First, the kind of bulk freight for which rail is most suited is itself a

declining market. Secondly, the expanding market for consumer goods freight are just-in-time deliveries to supermarkets and so on—where the requirement is to shift comparatively small amounts every day to individual supermarkets, with prompt delivery. That is normal commercial practice, and all the developments are in that direction. Rail is not particularly well suited to competing with road for that sort of freight, and it must improve in order to do so.
Thirdly, a key issue in the competitiveness and viability of rail is its suitability for transporting freight over long distances—and almost inevitably, we do not have as many as other countries. The same table that I quoted earlier shows that the average length of haul in Great Britain is 113 miles, compared with 154 in France, 249 in western Germany, and 367 in Italy. However, I believe that the channel tunnel offers an opportunity to overcome that distance problem, to make rail freight more viable. That is why there is such a concentration of investment by British Rail at this time.
I have never hidden the fact during the past year that it will he a big challenge to shift more freight back to rail, but I believe that our proposals—some of which were contained in the document that I published last week—offer the best package of opportunities in offering a combination of selling rail freight to the private sector, open access, breaking British Rail's monopoly, and enabling more freight operators to offer individual services or multiple services.
Also included is the three-point package that I presented on Second Reading. That brings me to new clause 17, which honours my undertaking on Second Reading to bring forward provisions to allow the payment of grants to rail freight operators in respect of track access charges. They seek to tip the balance in favour of rail over road where that is economically and viably sensible. Grant will be triggered only where there are demonstrable social and environmental benefits.
At this time of night, I do not propose to go into all the details. I am happy to do so, if that is required during the debate. All I would say at this stage is that the new clause provides for new track grants for goods operations. Therefore, I commend it to the House. It is a modest new grant. It is designed to deal with those marginal rail freight flows that cannot fully pay their way, and where track costs are the problem.
However, taken as part of the package which I have briefly outlined, I believe that it offers the best opportunity for getting more freight off the roads and on to rail and, in particular, of halting the decline in the carriage of freight by rail. That is something to which everybody subscribes but which has proved very difficult to achieve in practice. I believe that our proposals, of which this is part, offer the best opportunity.

Mr. Prescott: Like the Secretary of State, I feel that the debate on freight warrants more time than it is likely to get because of the pressures of time at this late hour. I do not disagree fundamentally with the Government's approach. I have argued for it for 20 years, even against a Labour Government. We are now beginning to witness the acceptance in this country of a social freight system—acceptance that subsidies should be used to encourage the movement of freight from road to rail. There has been some movement in the past few years as a result of the


section 8 provision—but not enough. It has not made up for the difference between the costs of moving freight by road compared with rail.
No matter how effective these provisions may be—we hope that they will be effective—the reality is that most freight traffic—85 per cent., or even more—will always be carried by road. A 1 per cent. increase in total freight traffic is the equivalent of almost double what is carried by rail at this time. Road traffic is increasing by 1 per cent. a year, anyway.
The road versus rail argument has always been a nonsense. We should use both road and rail capacity as best we can. There is considerable congestion on our roads. It is agreed that we shall be unable to build our way out of that problem and that we should use rail more effectively than we do now.
Past policy has not been right in one particular respect: that freight should be expected to achieve an 8 per cent. rate of return. It has been difficult for British Rail operators to achieve that return. One difficulty facing British Rail is that its rolling stock, particularly engines, is very old. British Rail freight is often pulled by two or three engines, on account of their age. It was one of the reasons that led me to accept that private sector capital should be made available to British Rail for freight. I have never had an ideologial problem over that.
British Rail's need for capital is so great that if private sector companies, such as English China Clays, are prepared to provide resources to take that traffic off the roads and put it on to rail, it is a good investment for the community. It is far more expensive to build roads than to use fully, by means of subsidy, the rail capacity that is already available.
There have been a number of examples, but a simple change from public to private resources does not guarantee overnight success. English China Clays ran into problems when Tiger Rail moved into Scotland. That was a private operation. It went bankrupt. Rail Charter, another private company. is another example. There is no guarantee, I repeat, that private operations will be a success. Those examples perhaps reflect the difficulties of the times.
My point is, perhaps, an ideological one: that a change of ownership does not necessarily guarantee that there will be a movement from road to rail. We spend far too long arguing about whether "public" means only public money and public use and about whether "private" means privately owned, effective use being made only of private capital. That is not the case.
British Rail has been judged a little unfairly. Its long-haul freight, particularly the movement of coal and steel, has been in massive decline, for reasons that are known to the House. Its merry-go-round trains were in advance of rail investment in most other parts of the country. It has a good record on through haul.
One of the problems of moving a large amount of traffic from the road to rail is that one cannot always guarantee that the traffic will be in trainloads. Trainloads are cheap but much traffic is in wagonloads. It is very expensive to operate a wagonload system and we must recognise that there are financial problems in attracting traffic from the roads and on to the rail.
The irony is that the Government's own proposals, with the enforcement of the expected rates of return which they have increased in the past 12 months, have forced British Rail to ditch more traffic. We have mentioned cider,

cement and other products, trainloads of which are being chased off the railways and on to the roads. That is unfortunate. Indeed, it is silly that the resources which will be available under the new rules are not made readily available to British Rail by the Secretary of State. He could ensure that they are, although there was some dispute about the issue on Second Reading.
There is nothing to stop the Secretary of State making changes under section 8 to increase the subsidy in order to retain the traffic which is currently moved by rail and which the private sector wishes to keep on the railway but which is increasingly being forced on to the roads. It would be sad if traffic were moved back on to the railway once the orders are introduced. Why cannot the Secretary of State take the necessary action now? It would be welcomed by all involved.

Mr. Nigel Spearing: My hon. Friend is making a fundamental point. With the new clause, the Government are apparently attempting to do something that they refused to do under public ownership. Perhaps my hon. Friend will confirm that.
As this is the Report stage, will my hon. Friend mention some elementary points which have not come across in public print? On what basis will Railtrack charge for freight traffic which will presumably be originated by anyone who can offer the stock and locomotives for a particular service? Will it be in the hands of the accountants, or will it be subject to marginal cost pricing? It is possible that there could be an increase in freight traffic merely through the accountants' use of figures.

Mr. Prescott: There is a great deal in what my hon. Friend says. It brings to mind an experience of the railway system in my area of Hull, which led me to argue with the Labour Government of the time that their view that there should be no subsidy for freight, and the accounting rules affecting the operation of the freight system, were nonsense.
Freightliner which operated from Hull provided a network service to a major port. It was desperately short of cash and wanted a Freightliner crane in York to be moved to Liverpool, but it was unable to get the Treasury to give it increased resources or to raise its borrowing requirement and so began to cannibalise the system. it argued that it needed to move the crane. It made sense from Freightliner's point of view but it meant that the community was going to lose a freight service.
When I approached the then Labour Minister, he argued that a subsidy could be given only to the passenger service, not to freight. It sounded like a fair principle and I understood why he said what he did, but the consequence was that we lost the freight service and the line lost revenue. By losing revenue, and because the Government were prepared to increase the subsidy for passengers, the community ended up paying more in passenger subsidy and losing a freight service. In my view, the community lost because more traffic went on to the roads and we paid more in subsidy because we believed in subsidies for passengers but not for freight.
The new clause raises the possibility that subsidies can be used, a notion in which I have always believed. I am glad that the Secretary of State is introducing the idea, although I could not convince the Labour Government at that time that they should consider it. It is a sound idea. Like many of my ideas, the Government have got around


to picking it up so I can hardly vote against them on this occasion. We hope that it will have the desired effect, although I am a little doubtful.
We must wait and see what the total costs are because one of the difficulties with the Government's thinking now is the track costs. Railtrack, an independent body, may be expected to make an 8 per cent. rate of return. For an independent body which is presently in the public sector but earmarked to go into the private sector, that rate of return, or whatever rate is expected, means that the costs will be considerable and that they will be imposed on the operator. The Government say that the new grant under the new clause is geared to dealing with that track cost. I hear from operators that they have some doubt about that; I hope that they are wrong. We need to know many more details.
12 midnight
I have seen the complicated formulae which are available in the consultative documents on the matter. I do not know whether the Secretary of State understands them. I am not sure that I understand them although I have tried to do so on a number of occasions. We shall have to see some examples before we can have a full understanding. The bottom line seems to be that the Government are prepared to pay subsidies for anything that is not operating costs. The operators are expected to provide the fuel and the running costs, but subsidies could make up the difference between what the commercial provider is prepared to give—[Interruption.] I thought that I heard a different view being expressed in the official Box. As the House moved from passenger to freight services, a new group of civil servants walked in. I have often thought that it would have been nice in the past few days to have had different advisers to give us advice on different matters.
The complexity of the system is such that everything will depend on how much money is made available. As I understand the Secretary of State, there was to be a limit on the amount of subsidy available which has now been removed. Presumably, whatever money is given and by whom will be part of the public expenditure round and will have to be negotiated and readily available each year. Is there a limit? Could the Secretary of State give us some idea of the estimates he has on that? Presumably the money will be governed by Treasury rules about the amount that can be lent. I assume that the money will be part of the PSBR. Could the Secretary of State tell us? Alongside that, we must put the £1 billion-plus of PSO payments—a figure that we all agree will continue. Having followed a policy over the past years of saying how the PSO has been halved and how that has been a great success, the Government now propose to double the amount and they crow that that is a success policy. Whatever, we are back to the figure of £1 billion at which we started at the beginning of the 10-year period, despite the different policies of different Ministers. Do we now expect £1 billion of subsidies on the freight side? Has the Secretary of State any idea of the order of magnitude or resources that will be available to meet the requirements? As he can understand, that could double the leading requirement and the subsidies given by the Treasury to the railway sector in both passenger and freight operations.
Has the Secretary of State given any thought to an idea that was suggested to me and to other hon. Members by Railstore? It is an interesting idea about which many of the operators will be thinking. If there is to be competition between rail and road, and if we seek through the grants to make the competition fairer, the judgment will be made—as it is now—that what those at the Department of Transport who are responsible for investment in roads impose as a road tax is a contribution to costs. There is some argument about whether the full costs are met; I shall leave that to one side at present.
The structure is that the Department of Transport imposes the so-called "tax" on lorries; Railtrack is the equivalent body on the rail side. It could impose a charge, which might vary. It does not vary on the roads, where there is a charge for a particular size of vehicle. Railstore talks about a 44-tonne lorry—all the signs are that that is the size to which we are moving. The road fund licence for a 40-ft lorry that carries 24 tonnes is £2,160. Railstore suggests that the charge for the 24 tonnes that a railway wagon can carry should be £2,160. If Railtrack and the Department of Transport were seen as comparable bodies which raised money by some form of tax—either a road or a rail fund tax—those would, Railstore believes, be fair amounts. I do not know.
Has the Secretary of State given any consideration to comparability? The suggestions are concerned with trying to level the field of competition and with intervening to try to get more traffic off the roads and on to rail. Is the Secretary of State considering that or, under the massive bureaucracy that we are establishing through Railtrack, will each company bid for its own contract? The latter seems to be what the Secretary of State is suggesting and I wonder whether he is happy with that kind of bureaucracy.
Under new clause 17, a new subsidy will be paid to meet different charges. Although the problems involved in the new subsidy may be considerable, I believe that this is a welcome development.
Although the Secretary of State did not mention it because he was pressed for time, I welcome the extension of section 8 grants. It makes a great deal of sense to extend those grants to traffic that has affected the environment. We must consider the effect on congestion on our motorways. I have argued for some time that apart from the immediate roads around the point of origin of the traffic, the proposal is worthwhile in respect of traffic heading south via the M25 or the M6. If we can get traffic to stay on the railways, particularly on the way to Europe, that will relieve congestion on the M25 and the M6.
I am glad that the Government have accepted the extension of the grants to assist traffic moving by rail. I also welcome the fact that the grant is to be extended for locomotives, sidings, wagons and terminal handling equipment. That makes a lot of sense.
My main complaint is why all that could not be available to British Rail. Why can we make all those grants and facilities available as soon as the railways enter the private sector? Is it to make the ideological point that the private sector can do it better? That has nothing to do with private entrepreneurial ability. It is fixing the system to provide the benefits which were denied to British Rail in the public sector. That is a load of ideological nonsense.
We should ignore the ideology and consider how the community can get more traffic from the road on to the


railways through the best use of its financial facilities and so reduce congestion costs and environmental damage and therefore best use our under-utilised facilities.
I welcome the fact that we are moving towards a PSO for freight. We should consider road and passenger and freight and passenger in the light of PSO and try to get more traffic off the roads and on to the railways.
I have taken advice, and although I do not accept it fully, I will accept it for the sake of this argument, that the grants that the Secretary of State is offering would not have prevented the current movement of traffic from rail to road. It is said that the grants would not even have covered operating costs. That is an interesting point, but it does not take us very far, particularly when we consider traffic from Abersystwyth and Oban where oil is now being transferred from rail to road simply because the operating costs are not being covered.
I hope that we can accept that the idea is to try to keep what traffic we have on the railways and, at the same time, try to encourage more. There are many examples of that. I have already referred to oil, but cement and cider in different areas of the country also prove my case.
We must recognise that there may be some deficiencies in what the Government are doing at the moment, but largely they are moving in the right direction. I do not necessarily accept the involvement of the private sector, but open access causes me no problems if it improves the amount of available capital and investment. If it improves the movement from road to rail and uses our railways to the full, that is acceptable in view of the many difficulties that the railways face. My only objection is why we have to wait until the system is privatised. Why not give BR the opportunity to do all that now?

Sir David Mitchell: I rise to support the new clause and to ask my right hon. Friend the Secretary of State a few questions. There is widespread support throughout the country for the concept of transporting more goods by rail than by road. As my right hon. Friend said, the channel tunnel will help. The old section 8 provided capital grants to assist in that transfer. I have to plead guilty that when I had some responsibility in that area I spent more public money under section 8 than any Minister has ever done.
New clause 17 allows the Secretary of State to pay all or part of the track usage charges that go to a freight operator. That is a far more important and wide-reaching change than the public have recognised. It is perhaps a pity that the debate is taking place shortly after midnight. I should have liked my right hon. Friend the Secretary of State to take the opportunity of blowing his trumpet and telling the freight hauliers, environmental pressure groups, the town centre conservation groups and the public at large just how important is the initiative that he is now taking to help that transfer of freight from road to rail.
If the Government intend to subsidise the transfer from road to rail, we need to know the answer to some questions. What are the criteria to be? My right hon. Friend spoke of a demonstrable benefit. Could he perhaps explain a little further what a demonstrable benefit is? Will it relate purely to congestion on the roads? Will such benefits include pre-empting the need to build new roads? Will it be taken into account that pressure of lorry traffic causes environmental damage in conservation areas? Could we have a little more information about the criteria that the Secretary of State will use? How much has my right hon. Friend budgeted to spend? Can he assure me

that section 8 will continue? Although its purpose is similar, it operates in a different way in the form of capital grants.
The public are seized of the fact that there is not a level playing field between the road haulier and rail transport. The hon. Member for Kingston upon Hull, East (Mr. Prescott) drew attention to the proposition from Railstore Ltd. which has been circulated to several hon. Members. It asks simply why we do not charge for a rail freight truck the same as would be charged for an equivalent weight road freight truck in the form of a licence and use section 17 if that is too heavy a charge which needs to be remitted to achieve the Secretary of State's desire to achieve a transfer of freight from road to rail.
I support what is proposed in the new clause, but could my right hon. Friend spell out a little more information to the House?

Mr. Harris: I do not know whether it is because we have just passed the witching hour of midnight or whether the hon. Member for Kingston upon Hull, East (Mr. Prescott) has mellowed in recent times, but I find myself in agreement with many of the points that he made.
I believe that British Rail has thrown away much of its freight traffic, perhaps deliberately or perhaps because of circumstances. I had occasion in the past three weeks to write to Sir Bob Reid about what I regard as perhaps the supreme illustration of the way in which British Rail has thrown away its freight traffic. My hon. Friend the Member for Falmouth and Camborne (Mr. Coe) and I have received letters suggesting that British Rail was using road transport to take its fuel to Long Rock depot in my constituency to fuel its trains.
I asked Sir Bob how, if British Rail could not use its own rail service to move its fuel, it could expect anyone else to use rail freight services. He wrote back a nice letter in which he said that the economics were such that it was not feasible for British Rail to move its fuel by rail. That make the point that rail freight is not used because freight services, certainly in the south-west, have been run down to the point of non-existence.
My constituents look back with nostalgia to the days when the fish from Newlyn went on trains and the broccoli—that is cauliflower to you, Mr. Deputy Speaker, but in Cornwall it is called broccoli—was transported in special trains. At this time of year, trainload after trainload ran from the branch lines through Helston to Gwinear road and through west Cornwall to the markets.
Now all that has gone, and I do not think that we can put the clock back, sad though that may be. However, I welcome the new clause, in the hope that we may be able to save some services.
It is a sad fact of life that, in recent times, Royal Mail parcel service traffic has been lost completely in my part of the world and, I suspect, many others. Similarly, newspaper trains have disappeared in the south-west. That is very sad. I hope that we will be able to regain some freight traffic. The hon. Member for Kingston upon Hull, East rightly referred to the position that, happily, still applies to china clay; let us hope that we hang on to that rail traffic.
I believe that we have opportunities to return some freight to rail, despite the obvious advantage of road transport for many commodities. I welcome new clause 17, which tries to do that, and I wish my right hon. Friend's laudable objectives every success.
When I wrote to Sir Bob Reid, Cornwall 2000 said, "Ah: the reason why British Rail is now switching transport of its own fuel to the roads is all to do with privatisation." That is not true; in fact, it is already happening under the present system. I believe that new clause 17 may provide at least a glimmer of hope that more freight will be returned from road to rail, and I wish my right hon. Friend every success in that endeavour.

Mr. Peter Bottomley: I add my support to this environmental measure, which—as the hon. Member for Kingston upon Hull, East (Mr. Prescott) pointed out—is a welcome development of the section 8 grant provision. I pay tribute to my hon. Friend the Member for Hampshire, North-West (Sir D. Mitchell) for all the work that he did as a Minister; I looked with admiration from my roads desk at what he was doing on the railways. Although there are few instances in which a grant by itself will make it possible to avoid building a road, there are many instances in which it will bring about an environmental improvement, especially in the localities where the goods start out or end up.
I think that it would be sensible for those proposing to give up such grants to, in effect, auction them: instead of saying, "We will not continue to use the railways unless we receive an ever-growing sum", they should ask what sort of sum is available and what kind of bid people will put in to try to transfer some of their traffic from road to rail or to stay on rail. That is the only way in which to achieve competition; otherwise, we shall end up with an open-ended subsidy, as we have in other contexts.
Let me end by making a prediction. As those involved in moving freight say that they do not need a road through Oxleas wood, I forecast that it will not be built.

Mr. MacGregor: By leave of the House, Mr. Deputy Speaker, I shall reply briefly to the debate.
I am very grateful for the positive response that the new clause has received from hon. Members on both sides of the House. We have had a short but realistic debate: while we all want more freight to be transported by rail—I strongly agree with my hon. Friend the Member for Hampshire, North-West (Sir D. Mitchell) on that—we also know that it will be difficult to achieve and that we need a package to give us the opportunity of achieving it.
I am grateful to the hon. Member for Kingston upon Hull, East (Mr. Prescott) for what he said. Let me quickly answer his questions. He asked about the size of the subsidy and whether it would be open ended. From the point of view of the beneficiary, subsection (2) of the new clause makes it clear that it is not open ended; payment will be triggered only when there are demonstrable social and environmental benefits. As for the total amounts, the hon. Gentleman is right to say that they will have to be negotiated each year as part of the public expenditure round. At this stage we have no clear facts on which to build estimates of what will be needed, but it will clearly have to be part of the public expenditure negotiations in the autumn and the White Paper.
I am grateful to the hon. Gentleman for the welcome that he gave to the other parts of the package—the freight facilities grant and the potential move to 44-tonne lorries for combined transport movements to railheads. I say

potential because we went out to consultation on that issue and I am now evaluating all the responses. Clearly, we hope to implement that move. The hon. Gentleman suggested that there was an element of ideology in that move as we were proposing the package only as we moved towards privatising the freight section of railways. That is not true; the move was made as a result of my analysis of the problems of freight in the past year.
The hon. Gentleman also asked me about some freight operations that are no longer being continued on rail because the contracts involved were not even covering the operating costs. He is right about that and under the proposal the grant will be available to cover track access costs, not operating costs, which must be right. That partly answers my hon. Friend the Member for St. Ives (Mr. Harris). It is true that some contracts have been lost in the past year—they did not even cover their operating costs, let alone their track costs. To put the figure in context, last year it involved about 3 per cent. of the volume of trainload freight, and some new contracts have been awarded in the past year.
My heart sank when the hon. Member for Kingston upon Hull, East started talking about Railstore and level playing fields. It sank only because I realised that to do justice to the issues raised by the hon. Gentleman would take about an hour and I am sure that the House would not wish me to speak for that long at this time of night. My hon. Friend the Minister of State has responded to a number of requests from colleagues in the House on the Railstore analysis.
The level playing field argument is complex and I shall not enter into it tonight except to say that the Green Paper on motorways and the possibilities for private finance which, as the House knows, I shall soon be producing contains a fairly long analysis of the level playing fields issue. The hon. Gentleman will see that it is complicated and that the simple comparison made by Railstore does not do justice to the argument.

Mr. Spearing: The Secretary of State will appreciate that the issue of freight, and its increase, is vital to increasing the finances of the railway network, whatever it may comprise. On what basis will the future track cost of freight be calculated? He has explained the disastrous present position of fuel being taken by road, even for British Rail, due to the fact that it cannot cover its track costs. If there is to be a minimum timetable—which he said that there would be for passenger traffic—will the marginal costs of the additional track costs for the freight that may use those routes be the basis of the charge? If not, what is the basis to be? Unless we know that, the degree to which the subsidy will help remains unknown.

Mr. MacGregor: The issue raised by my hon. Friend the Member for St. Ives did not relate to track costs, but to the fact that the contractors were not even covering their operating costs, which is a problem. On the issue of track costs, we have stated the broad principles for access charges. I do not wish to speak on the subject in detail now, but the relevant document is freely available to the hon. Member for Kingston upon Hull, East. The relevant point in relation to the new clause is that it enables up to 100 per cent. of the track costs to be met where there are clear social and environmental benefits.
My hon. Friend the Member for Hampshire, North-West asked how the environmental benefits would


be evaluated. Officials in the Department are currently drawing up the administrative guidelines that will govern the new grant regime, including the methodology for evaluating environmental benefits. I envisage that the guidelines will be similar to those that apply to the current freight facilities grant scheme, with environmental benefits measured in terms of reduced lorry miles. All applications will also be subject to a financial appraisal and there will be safeguards against fraud. I note the comments of my hon. Friend, who has always shown an interest in the subject. I will ensure that he receives the details as soon as they are available.

Question put and agreed to.

Clause read a Second time, and added to the Bill.

Orders of the Day — New clause 18

EXERCISE OF FUNCTIONS FOR PURPOSE OF ENCOURAGING INVESTMENT IN THE RAILWAYS

'.—(1) The Franchising Director or a Passenger Transport Authority or Passenger Transport Executive—

(a) in exercising or deciding whether or not to exercise any of his, or (as the case may be) their, franchising functions, may take into account the desirability of encouraging railway investment; and
(b) may exercise any such functions for the purpose of encouraging railway investment or for purposes which include that purpose.

(2) The Franchising Director may, for the purpose of encouraging railway investment, enter into agreements with any person under which the Franchising Director undertakes to exercise franchising functions of his or to exercise such functions in a particular manner.

(3) The Franchising Director and any Passenger Transport Executive may enter into agreements with each other as to the terms on which franchise agreements to which the Executive is to be a party are to be entered into.

(4) In this section—
franchising functions", in relation to the Franchising Director, means—

(a) any functions of his under sections 15, 17, 20 to 30, (Transfers of franchise assets and shares), (Failure to secure subsequent franchise agreement), (Contracts between the Franchising Director and the Board for the provision of non-franchised railway, passenger services) and (Powers of the Franchising Director to form and finance companies and to acquire and dispose of assets) (3);
(b) any power conferred on him under or by virtue of Part II below with respect to the effecting by transfer scheme of any transfer contemplated by any provision of those sections; and
(c) any other functions of his which relate to the provision of railway passenger services under franchise agreements;
franchising functions", in relation to a Passenger Transport Authority or Passenger Transport Executive, means any functions conferred or imposed on the Authority or, as the case may be, the Executive under or by virtue of section 29 above;
railway investment" means investment in assets for use in the provision of railway services.'.—[Mr. Freeman.]

Brought up, and read the First time.

Mr. Freeman: I beg to move, That the clause be read a Second time.
I suggest to the hon. Member for Morley and Leeds, South (Mr. Gunnell) that, because this is such an important subject, I send him a copy of the full statement that I intend to make next Thursday, in the recess, which

brings together all the initiatives on leasing. Perhaps he and I can then have an Adjournment debate on the West Yorkshire PTE rolling stock issue because the way forward on that may be charted more clearly as a result of the statement that I shall make next Thursday, assuming that the new clause is accepted.

Mr. Prescott: I am all for doing things for the convenience of the House, but the statement on leasing is important. We are now being told that the statement cannot be made in the House because hon. Members want to go home. I understand the argument. Labour Members do not have to stay for the vote. We cannot win in the House. If we want to let those hon. Members go who do not want to vote, we can stay and talk. Then we are told that we cannot have a statement now because hon. Members want to go home, but we will have it next week when we are in recess. Frankly, that is not acceptable. We are supposed to subject the Minister's statements to examination. I am fed up with a Department that constantly gives statements outside and not in the House. Even the objectives for British Rail are no longer given in the House—they are announced outside.
I have been told that there is an important development on the issue of leasing. As hon. Members know, I have been an advocate of financed leasing for a long time. When this Government and the last Labour Government would not accept it, I thought that at least I would have had an opportunity in the House to see how this Government approach the issue of leasing. [Interruption.] This is important. I hope that the Government Whip does not keep making that sort of face. I am all for the organisation of business. I am not saying that we should have an hour's debate, but we should have at least five or 10 minutes because leasing is important. It gives us an opportunity to deal with the real problems of finance in British Rail. It cannot be achieved by simply getting finance from the Treasury—it must come some other way.
We will not have an opportunity to hear any statement. Does that mean that the Minister does not have a statement, or that he is thinking about it? If he has it, why does not he make it to us tonight so that we can go away and at least read it? Then I would not need to wait until the recess because I hate giving press statements on what Ministers have said. What does the Minister intend to do?

Mr. Freeman: If I catch your eye again, Mr. Deputy Speaker, I will be happy to go into detail.

Mr. Prescott: I am not asking the Minister for the statement—I am trying to get a proper balance, as the Secretary of State did on the issue of freight. The Secretary of State wanted to make a full and proper statement about the important matter of freight, but, in five minutes, he managed to give the essential details.
I am not asking the Minister to give us the full statement on leasing. If he will give the details in a parliamentary reply, as he and the Department always do, I will put a question down tonight. He can reply to me or my hon. Friend the Member for Morley and Leeds, South (Mr. Gunnell), who is being pressed not to get into this debate. Can we find a happy compromise, because there is a fair point to be made? We must get a balance on this matter which is not being achieved at present.
The Minister could give us one or two points to show his position on leasing and then make his written statement later. If he did that, I could at least address some


of my criticisms of his essential points because, while I agree with leasing, certain points need to be made in the debate. I do not know how to deal with the matter now because the Minister has sat down and I have said my bit. He must have the leave of the House and God knows what else if he wants to speak again. I am prepared to give way to him for a few minutes so that he can outline his principles for leasing.

Mr. Freeman: New clause 18 deals specifically with the issue of the franchising director fettering his discretion, essentially, by agreeing to the continued use of leased rolling stock on a particular railway line through the first franchise. That is all that the new clause does.
The problem in the past has been that franchises might be for five, seven or 10 years, but the economic life of new rolling stock might be 30 years. As the hon. Gentleman knows, the new clause will allow the franchising director to develop an operating lease by saying to the franchisee, the lessor and to the PTE—perhaps all of them joined by a legal agreement—that he will undertake to continue to designate the leased rolling stock as franchise assets on a specific line beyond the first franchise. The franchises are for seven years, and the period for two franchises, 14 years, is about the minimum rental length that lessors will require on rolling stock to reduce the residual value to an acceptable risk. That is all that the new clause does and it has been widely welcomed.
12.30 am
I told the hon. Member for Morley and Leeds, South (Mr. Gunnell) that on Thursday I shall seek to bring together not new policy statements, but the various policy statements that we have made about the establishment of public sector rolling stock companies, the £150 million of lease finance for British Rail, and the time scale for decisions on that facility and one that may or may not replace it. I owe it to the House to set out clearly in one document all the statements that we have made so far.
There is a real possibility of developing a rolling stock leasing market, but we have to transfer the risk to the private sector to ensure that it is not caught by public expenditure constraints. I acknowledge that the hon. Gentleman has been a great supporter of leasing. I have differed from him, largely because he thinks that it is possible for British Rail as a nationalised industry to lease rolling stock and not be caught by conventional public expenditure definitions. That is not possible. This is the way forward and I look forward to debating the matter at much greater length—perhaps for the full time of an Adjournment debate or on some other occasion. [Interruption.] I am happy to debate specific issues, but I sense that the mood of the House is to move to other matters. I am not afraid to stay here all night to answer every question that hon. Members put to me. I am trying to observe the niceties of debate and endeavouring to be courteous by being as concise as possible.

Mr. Prescott: The Minister says that he would stay here all night. I hope that that means more than it did on Stagecoach rail when he launched a service and then shot into the sleeping section.
The Minister has made an important statement. I look forward to his written comments and hope that we can have a longer debate in the future. I welcome the

Government's return to leasing. Years ago there were leasing arrangements for British Rail and I served on the Committee that investigated British Rail's use of those arrangements. BR abused them, and that is why the Treasury took them away. British Rail sold to the private sector and used the money that was raised and other tax arrangements for the revenue and running requirements of the railways. The resources should have been used for capital replacement, but BR was starved of cash at that time.
British Rail was able to lease as a publicly owned company, which shows that the Treasury has different rules for different industries at different times. The publicly owned British Airways was able to lease aeroplanes and there was no problem in dealing with that. The Treasury has never been consistent on this matter and policy depends on what the Treasury thinks is important at the time. BR has been denied the possibility of any further leasing.
The Government's attitude now is a welcome change. I am not sure that the Minister is right when he says that the public sector cannot lease. Every other railway system in Europe leases and they are publicly owned. Treasury rules in Britain are different. It is not that public finance cannot be organised to allow the public sector to raise its capital requirements on lease. A silly British rule makes us feel superior to the French, whose railway system has got the better part of the deal, as President Mitterrand reminded us only last week.
Even if the Minister sets up separate leasing companies, presumably they will be subsidiaries of British Rail. If so, under the normal Treasury rules, they will still be subjected to the PSBR rules and the external financial limits. How will they be free from those constraints? From what the Minister has said, I cannot see that those new companies will be subject to anything different. Those companies are intended to be the subsidiaries of a publicly owned company and, by definition, they are wholly owned by British Rail. According to the Treasury's definition, and even subject to its latest rules on private finance, those companies will be considered a public sector liability. Given what the Minister has said, I cannot understand how it is possible for those companies to be free from the restraints of public financing and the Treasury rules interpreting that financing.
I should like to consider other technical matters relating to maintenance and operational stupidities that stem from that interpretation of the Treasury rules, but, given the lateness of the hour, I shall not do so.
The Government want competition in the private sector—I do not think that there is much available—but they cannot afford to allow an operator to have a franchise for more than seven years. If a franchise were to last as long as the life of the stock, the franchisee would be given private monopoly control for perhaps 20 years.
The Government are faced with a dilemma: who owns the stock? The operator will not be prepared to invest in something for which he might have an operational contract of seven years only, especially if the asset he has purchased will hold its value for 20 years. Should he lose the contract and have to pass it on, that will place him in a difficult position. The reality is that the public sector will own that stock. I am happy about that, because it will make it all the easier for me to bring that stock back into


the sector where it belongs. If that is an ideological point, I happen to believe that 80 per cent. of the electorate agree with me.
Leaving that aside, what the Minister has said represents a welcome step forward, although I do not understand how that falls in with the supposed one great leap from the existing controls under the current interpretation of the Treasury rules.

Mr. Gunnell: I welcome new clause 18. I accept the Minister's offer of an Adjournment debate on this matter and I shall put in for one as soon as we return from the spring recess.

Mr. Peter Bottomley: It would be appropriate to say something about the Government's response to the report of the Select Committee on Transport on investment in the railways. We are discussing the investment new clause which does not limit itself to investment in rolling stock.
That report noted:
if Ministers' expectations of increased private and public sector investment in the railways are not realised it will scarcely matter what structure of ownership or management is put in place.
The Select Committee will be grateful that the Government have recognised that the provision of sufficient resources is important. In answer to the Select Committee's call for investment, however, the Government said:
Investment in British Rail will show a temporary dip this year but it is still high in comparison with recent years. This dip is in part due to passing the peak of new rolling stock deliveries.
The Select Committee has been most concerned about the investment famine that will become apparent in the next two to three years. From discussions that the Select Committee had with witnesses, it became clear that private sector operators are unlikely to place orders for the next two years and are unlikely to receive deliveries for a year or two after that. In effect, there is a four-year gap.
Without a steady stream of orders, we will not preserve our railway stock building at the desired level If we consider channel tunnel-linked investment and what is happening, we hope, with crossrail, Thameslink 2000, the Jubilee line extension and the fact that the 10 per cent. of British Rail stock, which is way past its sell-by date, must be replaced, we will end up with a boost in railway stock investment at a time when we have half destroyed our railway stock building industry. That is not good value for money or good for employment.
In the past nine months, we have had a great deal of discussion about how we should spend a lot of money subsidising extra jobs underground. If we spent anything like that amount of money in the next three years endowing capital investment in British Rail, we would do more for employment prospects throughout the country and make more of a contribution towards the economy than through investing underground. That would also help railways make their full economic contribution to the economic geography of the United Kingdom—Scotland, the north of England, Wales, the south-west as well as the rail links to the ports that link us to Northern Ireland.
I hope that the Government will find a way—I understand that it cannot be included in the Bill—in which to create capital investment in British Rail—I suppose that one should now say the railways—up to the level of above £1,000 million a year for the next five years.
That would be better than giving £1,000 million in the year before an election, and then cutting it to below £600 million in the years after the election. Those sudden boosts and drops are economically highly inefficient. The Government must find a way, with or without private sector help, to have a level of capital investment that ensures that the existing railway is kept at the present running speeds or, even better, increased speeds, rather than continuing the deterioration on the west coast mainline.
In their response to the investment section of the Select Committee report, the Government have said that they agree with four fifths of what the Committee said. The one fifth that is still in doubt, with the exception of British Rail bidding for franchises, is the most important part—the level of cash investment for this year, next year and the year after. If the Government could find a way to endow the railways with a high level of capital investment, they would find that their plans work, and that the bids for the franchise would be at a higher level, with very little net cost to the Government or the taxpayer. That level of capital investment—on which Ministers probably cannot give a full response tonight—will be the key to the success of their proposals.

Mr. Bayley: I agree with the hon. Member for Eltham (Mr. Bottomley). His view was shared by hon. Members of all parties serving on the Transport Select Committee. As he said, it is vital that the Bill allows the franchising director to take note of the investment needs of the railways when issuing the terms of the franchise. To provide the sort of railway that we want and to maintain the ability to manufacture rolling stock, we need investment.
The hon. Member for Eltham proposed an investment level that needs to be secured whether the investment comes from the private sector or the public sector over the next three or four years. If that does not happen, we shall not have a railway manufacturing capacity left to provide for rail rolling stock needs towards the end of the decade. I hope that the Minister will respond to the points that have been made.

Mr. Gary Waller: I hope that, even at this late hour, I will be forgiven if I say a few words about the new clause, which is, as my hon. Friend the Minister knows, of extreme importance to my constituency because it relates, perhaps more specifically than to any other project, to the electrification scheme for the Leeds, Bradford, Airedale and Wharfedale lines. Regrettably, I shall not be able to be here on Thursday, as I shall be away with a Select Committee, so it is important that I say something about it now.
The project has gained universal approval because not only will its result be of great benefit to people in the area but it more than met the 8 per cent. return on capital that was demanded by the Treasury. As my hon. Friend the Minister knows, there was no problem in going ahead quickly with credit approval for the track electrification, but since that point, a cloud of uncertainty has hung over the provision of rolling stock. Already the scheme has made history because exceptional provision was made for leasing arrangements to be entered into and still, regrettably, problems continued to arise with the financial institutions because of the uncertainties that lay ahead.
I pay tribute to my hon. Friend the Minister for the time and energy that he has devoted to solving the problem. I know that he has made a number of visits to west Yorkshire and has worked extremely hard to try to blow away the difficulties that have arisen. I am grateful to him for introducing the new clause. I hope that it will enable new rolling stock to be running on the Airedale and Wharfedale lines sooner rather than later, because the local people deserve that.
Tribute should also be paid to the Wharfedale rail users group, which has played an important part in the process. It has access to a great deal of expertise. I welcome the fact that my hon. Friend the Minister has already said that the franchising director will be committed to consult user groups such as this which have an important role. I welcome the new clause, which I believe will prove extremely helpful.

Mr. John Greenway: I shall take just one minute of the time of the House to support the remarks of my hon. Friend the Member for Eltham (Mr. Bottomley). This is potentially the most important new clause that the House will debate throughout the Bill's entire Report stage. We all want an improved railway system, but we will not get that unless there is investment in new rolling stock. The real issue is whether the new clause provides the mechanism to overcome the difficulty that the public purse simply cannot afford that. We heard what the hon. Member for Kingston upon Hill, East (Mr. Prescott) said about the constraints on the public sector borrowing requirement.
I hope that in the Adjournment debate on Thursday my hon. Friend the Minister for Public Transport will reassure the House that the mechanism will allow for investment in rolling stock. Many of my constituents work at the ABB factory, as do many of those of the hon. Member for York (Mr. Bayley). My hon. Friend the Minister is aware of the great concern in York that, unless orders for new rolling stock are placed with ABB over the next two or three years, we will lose the capacity of what is undoubtedly the most modern rail workshop in Europe. That would be a tragedy.
I hope that my hon. Friend will bear those points in mind when he responds not just to this debate but to the wider issue of ensuring that there is more investment in our railways.

Mr. Cryer: I want to add to the remarks about the new clause and encouragement for investment. I want to put my comments in the context of the idea that, for some reason, the Minister should be congratulated on—and, by reflection, the Government approved for—the way that he has dealt with franchising. As I have said, the Government's playing of ideological drakes and ducks with the railways has prevented leasehold investment in new rolling stock on the Leeds-Bradford and Airedale lines. The Minister shakes his head, but he well knows that that is the case. Had it not been for the uncertainty created by the Government's privatisation proposals, the leasing of new rolling stock for the electrified railways in west Yorkshire would have been decided long ago.
The hon. Gentleman must acknowledge that that uncertainty has led, for example, to a break in the ordering

programme for Hunslet Engineering, which is building new rolling stock for the Birmingham area and was to build the new rolling stock for the Aire Valley and Leeds-Bradford area. As the hon. Member for Ryedale (Mr. Greenway) said, it is important that there is a consistent ordering programme. Without that, skilled people will be pushed on to the dole to join the 3 million-long queue of misery created by the Government's economic policies. We will lose those vital skills. Britain has a longer history than any other nation in the building of railway engines, rolling stock and multiple units, electric and diesel. If there is not a consistent ordering programme, the necessary skills will be lost because the system of education and training will not be sustained. Indeed, that is already happening.
The new clause is by no means the panacea suggested by the hon. Member for Keighley (Mr. Waller). There are real difficulties with the Aire valley and Leeds-Bradford electrification scheme. Bradford has lost a valuable trolley bus innovation scheme, which was to cost £6 million and run from the centre of Bradford to part of my constituency. It was sacrificed to produce money for the Leeds-Bradford electrification scheme. Sacrifices have been made, but not to the same extent by the Government, who should bring the matter to a certain conclusion by providing up-to-date rolling stock for what will be a modernised railway with high commuter use at peak times.
The Minister may be emollient and smooth over our discussions in his usual way, but under his smoothness beats a sturdy, right-wing heart. [Interruption.] His Parliamentary Private Secretary, who thinks that all BBC programmes are communist propaganda, may gurgle at that, but he is not alone this evening—he sits in a right-wing, ideological cesspit. He must take the blame.
The ideological absurdity of privatisation, as symbolised by the new clause, has brought uncertainty both to this scheme and to the railways.

Mr. Freeman: This debate has taught me a lesson: I end up answering both it and an Adjournment debate.
The hon. Member for Kingston upon Hull, East (Mr. Prescott) asked me why leasing can develop successfully only with the private sector's involvement. If British Rail is the only possible operator, by definition it cannot write an operating lease. All leases are thus financing leases, so they are all capitalised and therefore count against public expenditure borrowing limits. Only when the new alternative of other public sector rolling stock operators opens up is it possible to write an operating lease.
My hon. Friend the Member for Eltham (Mr. Bottomley) was right to underline the importance of investment in both infrastructure and rolling stock. The Government acknowledge that. For the first time, Railtrack, the infrastructure body, will have its own external financing limit and will be obliged to plan 10 years ahead. That represents an advance. At present, when there are problems, due to the recession and a fall in fare revenues, investment is postponed and BR has to live within the overdraft limit. But for the first time infrastructure investment will henceforth be dealt with separately and will be planned a long time ahead.
We look forward later this year to the announcement of Railtrack's initial EFL.
The hon. Member for York (Mr. Bayley) and I have had several exchanges before on the subject of rolling stock and my hon. Friend the Member for Ryedale (Mr.


Greenway), whose constituency I have visited, is, l know, concerned about the future of ABB and employment in the rolling stock industry. I agree that we cannot afford to lose our domestic rolling stock manufacturing capacity. If we do, in five or 10 years' time, we will end up having to place orders with the French and Germans to cope with the next genuine upswing in the investment cycle for rolling stock.
It is my responsibility to ensure that BR places the order for £150 million as quickly as possible, not in four years' time. Because BR has concentrated the orders on trains that have already been designed, they can be built quickly, either in York or by GEC, whichever it decides. They will not have to be redesigned from scratch. I have given the House an undertaking that once the order has been placed I will work on the next one. It will have to be a genuine operating lease.
The hon. Member for Bradford, South (Mr. Cryer) and I have had exchanges before about the West Yorkshire PTE. He does not do me justice in the matter. He knows that it was a choice between the £50 million for infrastructure and an operating lease, or no project at all. I chose—I stick by my choice—the £50 million resource cover for infrastructure and tried to work with the PTE for a lease. With this group of amendments we stand a good chance—the Government, the PTE, the franchisee and the lessor all bound together in legal contracts—of ensuring that the lease is written.
I commend the new clause to the House.

Question put and agreed to.

Clause read a Second time, and added to the Bill.

Orders of the Day — New clause 19

PENALTY FARES

'.—(1) The Secretary of State may by regulations make provision for and in connection with—

(a) the imposition of requirements on persons travelling by, present on, or leaving trains or stations to produce, if required to do so in accordance with the regulations, a ticket or other authority authorising them to travel by, be present on, or leave the train or station in question; and
(b) the charging of persons in breach of such requirements to financial penalties (in this section referred to as "penalty fares") in such circumstances, and subject to compliance with such conditions (if any), as may be prescribed;
and in this section any reference to a ticket or other authority of any description includes a reference to any other document which, under the regulations, is required to be produced in conjunction with any such ticket or other authority, for the purpose of demonstrating that the ticket or other authority produced by a person is valid in his case.

(2) Regulations may make provision for or with respect to—

(a) the persons who may be charged penalty fares;
(b) the persons by or on behalf of whom penalty fares may be charged;
(c) the trains and stations by reference to which penalty fares may be charged;
(d) the amount, or the greatest amount, which a person may be charged by way of penalty fare, whether a specified amount or one determined in a prescribed manner;
(e) the authorising of persons to be collectors;
(f) the manner in which charges to penalty fares may be imposed by collectors, including any requirements to be complied with by or in relation to collectors;
(g) the authorising of collectors in prescribed circumstances to require persons on trains or stations to furnish prescribed information;

(h) the display of prescribed notices in places of a prescribed description;
(j) the manner in which, and the period within which, any penalty fare charged to a person is to be paid;
(k) the issue of prescribed documents to persons who are charged, or who have paid, penalty fares;
(l) the recovery of any unpaid penalty fare as a civil debt, including provision—

(i) for or with respect to defences that are to be available in proceedings for the recovery of an unpaid penalty fare; or
(ii) for presumptions of fact to operate, in such proceedings, in favour of the person charged with the penalty fare, but subject to compliance with prescribed procedural requirements;
(m) the retention, by persons by or on behalf of whom charges to penalty fares are imposed, of sums paid by way of penalty fare;
(n) the remission of liability to pay penalty fares and the repayment of sums paid by way of penalty fare;
(o) the prevention of a person's being liable both to payment of a penalty fare and to prosecution for a prescribed offence:
(p) the imposition of prohibitions on the charging of penalty fares by or on behalf of persons who are suspected by the Secretary of State or the Regulator, on reasonable grounds, of failing to comply with such requirements imposed by or under the regulations as may be prescribed.

(3) The documents mentioned in subsection (2)(k) above include any document which consists of or includes—

(a) notice of the imposition of a charge to a penalty fare;
(b) a receipt for the payment of a penalty fare; or
(c) a ticket or other authority to travel by, he present on, or leave a train or station.

(4) Regulations may impose, or make provision for and in connection with the imposition or enforcement of, prescribed requirements in prescribed circumstances on or against a holder of a passenger licence or station licence or a passenger service operator (whether or not one by or on behalf of whom penalty fares are or are to be charged); and, without prejudice to the generality of the foregoing, any such regulations may make provision with respect to—

(a) the display of notices relating to penalty fares;
(b) the provision of facilities for the issue of tickets or other authorities to travel by, be present on, or leave trains or stations;
(c) the provision of information to prescribed persons or persons of a prescribed class or description.

(5) The functions which may be conferred on the Regulator by regulations include—
(a) functions which involve the exercise by him of judgment or a discretion; and
(b) functions which empower him in prescribed circumstances to impose such conditions or requirements as he may think fit on prescribed persons or on persons of a prescribed class or description.

(6) Regulations may confer power on the Regulator to make by rules any provision which could be made by the Secretary of State by regulations, other than provision for or with respect to any matter specified in—
(a) paragraph (d), (l) or (o) of subsection (2) above; or (b) subsection (7) below;
and any such rules shall have effect, to such extent as may be prescribed, as if they were regulations.

(7) Regulations may provide that where information is required to be furnished pursuant to the regulations—
(a) a refusal to furnish any such information, or
(b) the furnishing of information which is false in a material particular,
shall, in prescribed circumstances, be an offence punishable on summary conviction by a fine not exceeding level 2 on the standard scale.

(8) Apart from subsection (7) above, nothing in this section creates, or authorises the creation of, any offence.

(9) Regulations may make provision for any area within Great Britain and may make different provision for or in relation to different areas.

(10) Any power of the Regulator to make rules under or by virtue of this section includes power to revoke, amend or re-enact any rules so made; and—

(a) any such rules may make different provision for different cases; and
(b) without prejudice to paragraph (a) above, subsection (9) above shall apply in relation to any such rules as it applies in relation to regulations.

(11) Subsections (2) to (5) above are without prejudice to the generality of subsection (1) above.

(12) In this section—

"collectors" means the individuals who perform the function (whether as servants or agents or otherwise) of imposing the charge of a penalty fare on the person liable to pay it under the regulations in each particular case;
"document", without prejudice to the generality of the expression, includes any badge, token, or photograph or any other form of identification, certification or authentication;
"prescribed" means specified in, or determined in accordance with, regulations;
"regulations" means regulations under subsection (1) above;
"station" includes a reference to a part of a station;
"ticket or other authority" shall be construed in accordance with subsection (1) above;
"train" includes a reference to a part of a train;
and, subject to that, expressions used in Part I above and in this section have the same meaning in this section as they have in that Part.'.—[Mr. Norris.]

Brought up, and read the First time.

Motion made, and Question proposed, That the clause be read a Second time.—[Mr. Norris.]

Mr. Deputy Speaker: Dr. Marek.

Hon. Members: Oh no!

Dr. Marek: It is all right Government Members moaning. I have been sitting quietly here listening to an interesting debate, but one that took time.
Where a ticket is not available at a station because the ticket office is closed, will there be strict conditions to ensure that—in any zone or other area where a penalty fare may be imposed on a passenger travelling without a ticket—a machine in working order will be in operation to issue an authority to travel? If such an authority is issued, can the passenger be certain of not being refused a discounted or any other ticket that might have been available at the station, had the station ticket office been open? If the Minister can give categorical assurances on those two points, we can deal with the amendment quickly.

The Minister for Transport in London (Mr. Steve Norris): I think that I can give the hon. Gentleman the assurances that he seeks.

Question put and agreed to.

Clause read a Second time, and added to the Bill.

Orders of the Day — New clause 5

CROWN APPLICATION

'.—(1) The following provisions of this Act bind the Crown—
(a) sections 15 to 19;
(b) section 43;
(c) sections 45 to 48, except sections 45(8) and 48(4) and (5);

(d) sections 49 to 52;
(e) sections 74 to 76, 79 to 82, 84 and 85;
(f) section 107, except subsections (7) and (8);
(g) section 125, so far as relating to other provisions of this Act which bind the Crown;
(h) Schedules 5, 6 and 7.

(2) Nothing in subsection (1) above so far as relating—

(a) to sections 45 to 48 above, or
(b) to section 125 above, so far as relating to those sections,
shall authorise proceedings to be brought against Her Majesty in her private capacity.

(3) Subsection (2) above shall be construed as if section 38(3) of the Crown Proceedings Act 1947 (interpretation of references in that Act to Her Majesty in her private capacity) were contained in this Act.'.—[Mr. Freeman.]

Brought up, read the First and Second time, and added to the Bill.

Orders of the Day — New clause 20

POWER TO MAKE CONSEQUENTIAL MODIFICATIONS IN OTHER ACTS ETC.

'.—(1) The Secretary of State may by order make such modifications of existing provisions as appear to him to be necessary or expedient in consequence of the provisions of this Act, being modifications in respect of—

(a) any reference in an existing provision to the Board or any subsidiary of the Board;
(b) any reference (in whatever terms) in an existing provision to any railway, railway service or railway undertaking;
(c) any reference (in whatever terms) in an existing provision to any person who—

(i) provides a railway service, or
(ii) carries on a railway undertaking,
or who is authorised to do so under or by virtue of any enactment;
(d) any reference in an existing provision to any enactment amended or repealed by or under this Act;
(e) any existing provision, so far as appearing to the Secretary of State to be of no further practical utility, having regard to the provisions of this Act;
(f) any other inconsistency between an existing provision and this Act.

(2) In this section—

"existing provision" means a provision contained in any Act (whether public general or local) passed, or in subordinate legislation made, before the relevant date;
"railway" has its wider meaning, within the meaning of Part I above;
"railway service" has the same meaning as in Part I above;
"the relevant date", in relation to any modification, means the date of the coming into force of the provision of this Act on which the modification is consequential;
"subordinate legislation" has the same meaning as in the Interpretation Act 1978.'.—[Mr. Freeman.]

Brought up, read the First and Second time, and added to the Bill.

Orders of the Day — New clause 7

CONFLICT BETWEEN DUTIES PLACED ON THE REGULATOR AND THE SECRETARY OF STATE

'(1) Where it appears to the Secretary of State or to the Regulator that, in discharging his duty regarding the exercise of the functions assigned or transferred to him under Part I of this Act, the manner best calculated for any reason or at any time under one or more of paragraphs (a) to (h) of subsection (1) of section 4 of this Act may be, to any material extent, inconsistent with his duties under any other such paragraph, he shall refer the matter to the Central Committee.

(2) The Central Committee shall consider any matter referred to it under subsection (1) above and may advise the Secretary of State or the Regulator (as the case may be) as to how, in its opinion, he should discharge his duty, having regard to all circumstances and, in the case of any advice to the Regulator, shall send a copy of that advice to the Secretary of State.

(3) The Secretary of State or the Regulator (as the case may be) shall have regard to any advice tendered by the Central Committee under subsection (2) above.

(4) Any referral under subsection (1) above may include a requirement that the Central Committee tender its advice with such time (being not less than 28 days from the date of the referral) as may be specified in the referral; and if such a requirement is not complied with, the Secretary of State or the Regulator (as the case may be) shall proceed as if the Central Committee had considered the matter but had tendered no advice.

(5) The Secretary of State shall lay before each House of Parliament a copy of any advice received by or sent to him under subsection (2) above.'.—[Dr. Marek.]

Brought up, and read the First time.

Dr. Marek: I beg to move, That the clause be read a Second time.
I am glad that I did not hear any moans this time.
This useful clause seeks to help the regulator, who will find himself in difficulty on a number of occasions when trying to perform the various duties imposed on him by clause 4. If the regulator has competing claims for his attention under the various subsections of clause 4, by this amendment he could appeal for advice. New clause 7 would give him the freedom to seek the advice of the Central Rail Users Consultative Committee. If it is added, it would make the Bill better and help the regulator to do his or her job.

Mr. Freeman: I accept the spirit of the hon. Gentleman's argument, but I do not accept the new clause. He argues that the regulator could go to the Central Rail Users Consultative Committee for advice. New clause 7, however, provides for a disputes resolution procedure, whereby if there is any disagreement between the Secretary of State and the regulator it would have to be referred to the Central Rail Users Consultative Committee. I could not agree to that, because the regulator and the Secretary of State have clearly defined separate but parallel duties. They are set out in clause 4 and other provisions of the Bill.
I am happy to accept the hon. Gentleman's recommendation that the Central Rail Users Consultative Committee should play an important part in offering advice to the regulator. It is a sensible recommendation. There should be a repository of information and experience in that committee. I underline the fact that we wish the committee to have real power and influence and a real job to do.

1 am

Dr. Marek: With the permission of the House, the Minister's reply has not been altogether negative. I invite him to think about how new clause 7 could be redrafted as a result of this exchange. If he could think of a form of words by means of which the regulator could go for advice to the CRCC, perhaps he would consider tabling an appropriate amendment in another place.
There is, however, one problem. There are constraints upon what the CRCC can discuss. An amendment would be needed to allow the CRCC to give advice to the regulator. If questions relating to classes of fares were

involved, there would have to be an additional amendment. The CRCC is not, as the Bill is drafted, allowed to discuss such matters.
I am pleased with the Minister's reply. Therefore, I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.

Orders of the Day — New clause 11

NATIONAL PLAN FOR RAILWAY SERVICES

'(1) It shall be the duty of the Secretary of State to formulate a national policy as respects the provision, maintenance and improvement of the railway network in Great Britain and from time to time to review that policy.

(2) In exercising his functions under subsection (1) above, the Secretary of State shall have regard to the desirability—

(a) of the policy operating in a consistent manner throughout Great Britain;
(b) of the policy being formulated early enough to enable its implementation to be achieved efficiently and to enable those with functions in relation to the provision, maintenance and improvement of railway services adequately to plan their own policies with respect to the execution of their functions.

(3) Before finally determining his policy in relation to any matter for the purposes of subsection (1) above, the Secretary of State shall engage in such consultations with those appearing to him to be representative of persons having such functions as are mentioned in subsection (2)(b) above as appear to him to be appropriate.

(4) The Secretary of State shall secure that a written report containing a summary of the policy formulated by him under subsection (1) above is prepared before the expiry of the period of twelve months beginning with the day on which this Act is passed and that subsequent reports are prepared at intervals of not more than one year.

(5) The Secretary of State shall lay a copy of each report prepared under subsection (4) above before both Houses of Parliament.'.—[Mr. Rathbone.]

Brought up, and read the First time.

Mr. Rathbone: I beg to move, That the clause be read a Second time.
The new clause is self-explanatory. It imposes a duty on the Secretary of State to formulate, in consultation with the operators, users and others, a national rail policy for the provision, maintenance and improvement of the railway network. It would provide a consistent framework within which passenger and freight services could be planned and operated over the short, medium and longer term. It would require the Secretary of State to prepare a written report and lay it before both Houses of Parliament.
In moving the new clause, I believe that one should tip one's hat again to our late colleague, Robert Adley. His belief in the way in which British Rail should operate in the future was always dependent upon a national plan for the railway services and a transport policy. Those are reflected in his Select Committee report.

Mr. Freeman: I certainly agree with the spirit of the new clause. I do not commend it to the House, but I can give clear assurances to my hon. Friend that the two key elements of the policy that he has just outlined will be followed. First, my right hon. Friend the Secretary of State for Transport will clarify his policy towards a national policy for the railway network, something which my right hon. Friend and I have sought to do on many occasions, particularly before the Select Committee that was chaired by the late Robert Adley. Secondly, I can give an assurance


that there will be a written report. Perhaps the right vehicle would be the Department's annual report, which is available to the House. My right hon. Friend confirms that he will ensure that the annual report is written in such a clear fashion as to set out not only the achievements of his policy, but the activities and responsibilities of the regulator, the franchising director and, most important of all, the investment programme.
We accept unreservedly the spirit of the new clause. I hope therefore that my hon. Friend will not feel it necessary to press it. I look forward to the production of the first annual report covering the period following Royal Assent and the introduction of our reforms.

Dr. Marek: If the information is to be included in the annual report, let us have a little objectivity rather than a glossy Government public relations handout. If it were objective, with only a few statistics and with level-headed statements, I could go along with what the Minister has just said.

Mr. Peter Bottomley: Without being presumptuous, I hope that, if Robert Adley is looking down on us, he will welcome what my hon. Friend the Minister said. I hope that he will smile at the way in which a number of my right hon. and hon. Friends in particular have debated with Ministers and that, like me, he will regard the outcome as advantageous to the country, as it is likely to help the railway's contribution to the country.

Mr. Rathbone: I thank my hon. Friend the Minister for the thought that he has put into the new clause in preparation for its being debated this evening. In light of what he had to say, I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.

Further consideration adjourned.—[Mr. Patnick.]

Bill, as amended (in the Standing Committee), to be further considered this day.

EUROPEAN COMMUNITY DOCUMENTS

Mr. Deputy Speaker: With permission, I shall put together the motions relating to European Community documents.

Motion made, and Question put forthwith pursuant to Standing Order No. 102(9) (European Standing Committees).

COMPANY TAXATION

That this House takes note of European Community Document No. 7021/92, relating to company taxation; endorses the principle of subsidiarity; believes that Commission proposals should allow for decentralisation of economic policy within member states; further believes that proposals should take full account of budgetary costs and the world context of Community action; and opposes measures which would distort the internal market and which bear upon company taxation.

SLAUGHTER OF ANIMALS

That this House takes note of European Community Documents Nos. 9880/91 and 10306/92 and the Supplementary Explanatory Memoranda submitted by the Ministry of Agriculture, Fisheries and Food on 15th February and 10th May 1993, relating to the protection of animals at the time of slaughter or killing; and supports the Government's intention to seek Community action to ensure high standards of welfare at slaughter which will be implemented and enforced throughout the Community.

YOUNG WORKERS (PROTECTION)

That this House takes note of European Community Documents Nos. 5378/92 and 4690/93 and the Supplementary Explanatory Memorandum submitted by the Department of Employment on 10th May 1993, relating to the protection of young people at work; endorses the conclusions of the Madrid, Rome and Edinburgh European Councils that measures taken in the field of social affairs should have full regard to their effects on job creation, to the principle of subsidiarity, and to the diversity of national traditions and practices; and shares the Government's view that, while protection for children and young people at work is essential, existing legislation in the United Kingdom provides appropriate protection, that the need for Community legislation to protect children and young people has not been demonstrated and that the proposed Directive would be damaging to their employment opportunities and prospects. —[Mr. Patnick.]

Question agreed to.

STATUTORY INSTRUMENTS, &c.

Mr. Deputy Speaker: With permission, I shall put together the motions relating to statutory instruments.

Motion made, and Question put forthwith pursuant to Standing Order No. 101(5) (Standing Committees on Statutory Instruments, &amp;c.).

UNFAIR DISMISSAL

That the draft Unfair Dismissal (Increase of Compensation Limit) Order 1993, which was laid before this House on 1st April, be approved.

LEGAL AID

That the draft Civil Legal Aid (Scope) Regulations 1993, which were laid before this House on 22nd April, be approved.—[Mr. Patnick.]

Question agreed to.

Bypass (Aylesbury)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Patnick]

Mr. David Lidington: We have waited several hours for the Adjournment debate, but as the Minister will know, my constituents in Aylesbury have waited far longer for their bypass. I welcome the opportunity to draw the Minister's attention and that of the House to the urgent need for better road communication to Aylesbury. I represent the county town of Buckinghamshire, a town designated as a growth area for housing and industry but whose growth is being stifled by inadequate road communication, which has been delayed for far too long.
In all my dealings with my hon. Friend the Minister, I have met with nothing but courtesy and good humour. I know that he will not take it amiss if I sometimes feel that it would take the pen of a Dickens to do justice to the way in which the Department of Transport has behaved with regard to the Aylesbury bypass. The spirit of the Circumlocution Office and its principle of "how not to do it" seems alive and well and is inspiring the Department's work.
The saga began as early as the 1960s, when the need for a bypass for Aylesbury was first recognised. In 1972, the Department of the Environment commissioned a highway feasibility study and concluded that a new trunk road was needed to link Oxford and the A1 (M), passing south of Milton Keynes. Eight years later, in 1980, the Department of Transport decided to abandon its plan for a new trunk road in favour of improvements to existing roads and a network of bypasses around the major towns.
The Thame bypass, part of the series of links, was completed in 1980. In 1985, the Department of Transport's document "National Roads, England" called on the three county councils involved—Hertfordshire, Bedfordshire and Buckinghamshire—to make bypass proposals to improve the A418-A505 route. In 1987, the Department of Transport announced in its White Paper that the Government intended to give the new route trunk road status. With that in mind, the Department provided a 100 per cent. grant for the Leighton Linslade bypass, which has now been completed, and proposes to make a 100 per cent. grant available for the proposed Wing bypass.
Buckinghamshire county council, as one would expect because it is an authority that is always active in the interests of its residents, did exactly what the Department of Transport asked. It formulated proposals to bypass Aylesbury. It drew up options for a bypass to the north or to the south of the town. It consulted the Aylesbury Vale district council. It published the alternatives in the local plan to allow full public consideration of the two options.
In 1989, the county council decided on the southern route as more practical and supported decisively by public opinion. Not only that, but the county council was ready to start building the first stage of the bypass linking the Wendover road, the A413, and the Stoke Mandeville road, the B443. The county council had planning permission for the first stage of the route. It had gone to the Secretary of State for Transport to ask whether he wanted to call in the application, and was told that he had no wish so to do.
In 1989, there was a further somersault by the Department of Transport. The White Paper "Roads for

Prosperity" stated the Government's intention to develop an east-west corridor between the M40 and the east coast ports. The Department took over from the county council responsibility for the Aylesbury proposals which would form part of that route. Concern was expressed by the local authorities then about possible delays. The Department, as always, was reassuring.
Sadly, those reassurances were not borne out in practice. On 13 November 1990, Buckinghamshire's concern about the continuing delay was recorded in the minutes of the Department of Transport's eastern region consultative committee. The Department then said that public consultation on the preferred route would take place in July 1991. That target was not met.
On 23 January 1992, the consultative committee met again and the public papers of the committee show a target date for public consultation on the preferred option of spring 1992. That target was not met. On 8 December 1992, the consultative committee convened once more and the target date was announced as spring or early summer of 1993. That target was not met, and we are told that the target has slipped a further few months to perhaps the autumn of this year. It is little wonder that my constituents are becoming impatient of the Department's promises, which have been so often postponed.
I ask my hon. Friend to explain the reasons for the delay. We know that Oxfordshire county council and South Oxfordshire district council object to the southern route and prefer the northern route up to Bicester. The differences between the various local authorities have been known for a long time. They are surely the issues that should be debated at the public inquiry which is now long overdue. The need is now urgent.
Aylesbury is designated as a growth area, and the new proposals for the south-east—SERPLAN—mean still more growth for the town. The housing target set out both in the structure plan and in the local plan cannot be met unless the bypass is built. The bypass has strong support from local business, because every study shows that it is poor road communications more than any other single factor that is holding back the needed growth in Aylesbury's economy and the town's recovery from a severe and long-lasting recession.
What inspired me to apply for this debate was that Aylesbury is now in the ridiculous position whereby new planning applications for businesses to take up vacant lots on industrial estates are being recommended by the county council to the district council for refusal on the grounds that new business would bring in extra traffic and that that would be more than the already congested roads in Aylesbury could bear.
For example, in early 1993 more than 24,000 vehicles passed along Gate House road in Aylesbury, which adjoins major industrial estates, in 12 hours. That was down 1,500 vehicles on the 1990 peak, a peak which I am sure will be reached again as economic recovery in the south-east gathers strength. The single carriageway of that road is inadequate for the purposes that it is supposed to serve.
There is a strong economic and social case for the Department to press ahead as quickly as possible with the bypass that it has promised for so long. However, there is also a personal side to this question and that concerns the personal circumstances of my many constituents who live along the proposed route of the bypass.
Fortuitously, in the past week I have received a letter from a constituent who lives in Stoke Mandeville. I want to read one paragraph of that letter which summarises the feelings of people in my constituent's position. After describing the difficulties he faced in selling his house, because searches declared that the bypass was likely to pass within 200 yards of his home, my constituent wrote:
I am not a 'NIMBY'. I simply ask that if the community wishes to mount a project for the general good then it should not be allowed in the process to damage my interests, life, career and marriage, all of which have been or are at threat because of this ineptitude. To prevaricate for over two years is neither equitable or responsible. To be dismissed with a mix of arrogance and indifference by Department of Transport officials; to be imprisoned without any end in sight to the sentence, is frankly intolerable in a fair and civilised society.
I believe that many other constituents who also live near the proposed routes would echo those sentiments.
In the interests of the town that I have the honour to represent and the many individuals whose lives have been blighted by the uncertainty over the future of the road, I ask my hon. Friend the Minister to explain the reasons for the delays so far; and to tell us how long it will be before the Department goes out to consultation on the preferred route and how long it will be before the building of this much needed bypass gets under way.

The Minister for Roads and Traffic (Mr. Kenneth Carlisle): It is my pleasure to congratulate my hon. Friend the Member for Aylesbury (Mr. Lidington) on securing tonight's debate. Throughout his time in the House, he has shown tremendous determination to bring to me, either here in the House or in the Department, his concerns about his local roads. I respect that very much. At this late hour, he has pursued the history of the Aylesbury bypass as fiercely as Sherlock Holmes would have pursued any rogue. I am sure that my hon. Friend will carry on determinedly in that vein until we have delivered the road.
I congratulate my hon. Friend on his speech and his determination. I recognise that Aylesbury, like many other communities in the country, needs a bypass and that there are very strong economic and personal reasons for that community to have a bypass. We have a very big road building programme and many conflicting demands to meet.
In answering this debate, I feel that it is worth exploring some of the history of the scheme and the broader issues. If we do that, we will obtain a better appreciation of the situation. The current scheme has its origins in local authority proposals that, in the 1980s, formed part of a plan for a new route between Thame and Stevenage. Since 1983, proposals have been developed on a southern route following a joint planning study and public consultation by the county and district councils.
The Aylesbury district plan, adopted in 1991, confirmed the planning status of the proposals and consequently planning decisions in the area have assumed that a southern bypass would be built. That set the scene, in planning terms, for a route south of Aylesbury, and the scheme entered the trunk road programme in 1989.
That date is not too distant. Many schemes which entered the programme before then are only just coming to fruition now. So the White Paper "Roads for Prosperity"

announced the plans for a new strategic east-west route between the M40 and the east coast ports that would build on work already carried out by local authorities.
In view of its background knowledge of the scheme as a local authority scheme and to maintain momentum, Buckinghamshire county council was appointed as the design agent to continue the development of the Aylesbury proposals to meet the needs of the new trunk road.
Several strategic options have been examined as the bypass has developed. The study has proved complex and I know that at times it has led to local disappointment when the expected targets for consultation on the route of the bypass have been achieved. My hon. Friend gave strong expression to that disappointment in his speech.
For a start, the original strategy for a southern route has been developed in detail and reviewed. The investigation of strategies involving routes north of the town, and the implications that they could have for local planning issues and the economies of the scheme have also been studied. We have also had to consider the location of junctions and the justification for road links that might be provided to bring relief to Aylesbury from traffic using the A41 and A418 corridor through the town.
I recognise the importance of the scheme to the area. Progress has been made as quickly as possible, given the required detailed analysis of the options. However, I am sure that my hon. Friend appreciates that, with a scheme which represents such a large investment and has a significant impact on the environment and the economy of the area, there must be proper evaluation before taking the next steps to public consultation.
I should like to strengthen the arguments by saying that the scheme is complex. The decisions are certainly not easy. The road will cost a considerable sum of money. I advise my hon. Friend that it would be foolish to rush ahead with a scheme which we could not deliver or which would not stand up to public inquiry. Many schemes have been rushed forward but then delayed far beyond the date by which they should have been built because the preparation was short. Therefore, it is our right, in such an expensive and complex scheme, to take due care.
Also relevant to Aylesbury is the future development of the western section of the east-west route west of the town to the M40. It is no secret to my hon. Friend that the choice is between a northerly route along the A41 and a southerly one along the A418/A329. The choice could have a bearing on the solution for Aylesbury. My hon. Friend will also be aware of the pressures that the choice will put on other communities. He will recall the recent Adjournment debate initiated by my hon. Friend the Member for Buckingham (Mr. Walden) in which we considered Waddesdon on the A41 west of Aylesbury.
I have considered in the past few days our conclusions for the consultant study. I expect shortly to make an announcement about the way ahead. Once that is done, I should be able to authorise the way forward for the Aylesbury bypass proposals. Then we shall be able to fit that bypass into the wider theme of the east-west route. When we do that, it will remove speculation about the possible consequential effects on communities west of Aylesbury. It will enable us to proceed with greater certainty in both local and strategic terms.
As I said, it is important to get it right. The Department is sometimes criticised for not thinking strategically and not seeing a motorway scheme beyond the limits of the town by which it passes. It is important that the east-west


route—which embraces not only Aylesbury, but communities to the west and many others to the east—is considered properly.
I must defend my Department's performance against my hon. Friend's understandable criticisms. We truly want a rapid, effective scheme, but—as I have said—we need to get it right. We seek at all times to deal with hard-pressed members of communities as gently, and as correctly, as possible.
I am sure that my hon. Friend appreciates that, within the scope of our busy roads programme, we are eager to make progress for Aylesbury and many other communities throughout the country. I thank him for raising the

subject, and hope that at least he and his constituents will be assured that progress with the bypass will proceed to the next stage in its development without delay. I hope that that stage will be reached fairly soon, not least because it is very important to relieve communities of blight and uncertainty.
I am certain that my hon. Friend will keep up his relentless pressure. He is determined to have the road, and I know that he will fight long for his community to secure it.

Question put and agreed to.

Adjourned accordingly at twenty-six minutes past One o'clock.